Yeah, the Bank of Canada is well aware that people have a ton of debt tied to the overnight rate, so if rates do start to come back up at some point, I'd suspect there were be big hintings at it well before hand and it would be done gradually. It's not just the mortgages, it's all the lines of credit that I think would really hurt people.
The only issue with this is that rates are so low, people think its a good idea to leverage to their eyeballs as the cost is so low. How do you fix that without raising rates and forcing a bunch of people into foreclosure and bankruptcy? I wonder how rates will play out over the next 5 or so years. I think something has to happen, but I'm not sure what.
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