Back in May, when COVID-19 was tightening its grip on the throats of the Canadian economy and housing markets, Evan Siddall, CEO of the Canada Mortgage and Housing Corporation (CMHC), spoke to the federal Standing Committee on Finance on actions the corporation had taken to alleviate financial stress on Canadian homeowners, including the mortgage deferral program.
“We acted quickly to help Canadians who are having difficulty paying their mortgages or rent due to income loss because of COVID-19,” said Siddall. “In co-ordination with private mortgage insurers, we are offering temporary deferral of mortgage payments for up to six months.”
Siddall estimated nearly 20 percent of mortgage holders will have elected to defer payments by September, calling it a potential deferral cliff.
Initial reaction to Siddall’s projection of 20 percent were scoffed at by economists, but according to alternative lender Equitable Group Inc., loan balances on COVID-19-related payment-deferral plans peaked at 20 percent at the end of May, but have declined significantly since then, to six percent as of July 17.