Lenders' payment deferrals kept a significant number of households liquid during the early months of the pandemic
Underscoring the crucial role that payment deferrals played in keeping Canadian households afloat during the height of the pandemic, an estimated 16.7% of the nation’s outstanding mortgage balance was in deferral as of mid-2020.
New data from Canada Mortgage and Housing Corporation showed that mortgage deferrals represented 86% of all consumer debt deferred.
On average, the per-loan balance of deferred mortgages was $270,597. In comparison, the average balance for all outstanding mortgages was $219,077.
The lion’s share of the postponed payments was at the Big Six, which held 79% of the total mortgage balance in deferral as of the end of June last year. Among the major banks, 18.1% of their outstanding mortgage balances were in deferral, while lower volumes were seen in other banks (11.7%), credit unions (10.6%), and other lenders (16%).
Geographically, the rate of deferrals was higher in Alberta than anywhere else in Canada, with the province seeing 24.1% of its outstanding mortgage balance being deferred as of June 30, 2020. Other territories that saw an elevated proportion of deferrals were Newfoundland and Labrador (20.2%) and New Brunswick (16.8%).
“Among the Big Six banks, 24.8% of the outstanding mortgage balance in Alberta was deferred,” CMHC said in its report. “The figure was 20.7% in Newfoundland and Labrador, 9.6% in Yukon, and between 10% and 20% in the other provinces and territories.”
With the Canadian economy exhibiting sustained recovery since then, the total mortgage balance in deferral fell by 79% from June to December last year. During the same period, the total balance of non-mortgage consumer debt in deferral declined by 88%.
