As higher borrowing costs drive up mortgage debt, one analyst said most of the risks for banks lie in renewals and Canadian lenders have a few years to prepare. 

Paul Gulberg, a senior equity analyst at Bloomberg Intelligence, said in a Monday interview with BNN Bloomberg that he believes Canadian banks will have enough time to absorb rising mortgage debt levels through earnings. 

“It’s an issue, (approximately) half of the bank loan books are in mortgages and residential mortgage rates are going up, while inflation is going up as well. So it's putting more stress on the consumer,” Gulberg said, adding that banks’ earning power remains strong. 

According to Gulberg, rising mortgage debt among Canadian borrowers could weigh on bank profits “in a fractional portion to the earnings.” 

Additionally, the majority of the risk to banks stems from mortgage renewals taking place in 2025 or 2026, Gulberg said. 

“We're two to three years away from it, which gives banks quite a bit of time to build up reserves if they need to, if they feel the market is going up.”