Province continues to wrestle with weaker incomes, mounting insolvency, and a struggling economy
Alberta posted the highest proportion of mortgage deferrals during the COVID-19 pandemic, according to the Canada Mortgage and Housing Corporation.
Approximately 21% of mortgages in the province were in deferral as of July, at the peak of the outbreak’s fiscal shock. Indeed, the rate was found to be particularly elevated in the oil-producing regions, with Saskatchewan and Newfoundland tied for second place behind Alberta at 14.8%, CMHC said.
Local industry professionals said that these readings weren’t surprising.
“I think Albertans have gone through some tough times,” RE/MAX realtor Justin Havre said at the time. “We typically don’t have the opportunity to defer mortgage payments when there is a collapse in energy payments, and when the opportunity was available to get mortgages deferred here in Alberta, I think a lot of people took the opportunity to preserve their cash because nobody really knew with this pandemic how long it would go on and what was going to come of it.”
In an interview with The Motley Fool, Donna Carson, licensed insolvency trustee at MNP Ltd., said that employees in more than 50% of Alberta’s households remain without work at present.
All of this, on top of other struggles like mounting insolvency levels and an economic malaise that already took hold in Alberta well before the outbreak.
The much weaker performance of petroleum products on the global stage is expected to pull Alberta’s GDP down by 11.3% this year, the Conference Board of Canada said in late August.
“The outlook for oil prices over the next two years is quite pessimistic because of the impact on transportation which is a big user of oil,” said Pedro Antunes, chief economist of the board. “That affects profits and royalties the government will have to forgo, but the biggest impact … is the capital investment. Firms have cut down to the bare bones.”
