Total amount of monthly mortgage payment deferrals reached $1B since pandemic started

According to the recent report by the Canada Mortgage and Housing Corporation (CMHC), more than three-quarters of a million homeowners have deferred or missed a mortgage payment during the COVID-19 pandemic. As a result, the total amount of monthly mortgage payment deferrals reached about $1 billion.

The annual report concerns the state of Canada’s mortgage market. As a rule, it looks at broad tendencies in the industry, but this year’s numbers are viewed through the lenses of COVID-19.

The report shows how significant the pandemic’s influence on mortgages was.

As you know, in March and April, Canada’s large banks introduced mortgage deferral programs allowing borrowers to skip some of their payments. Although the decision helped borrowers when incomes were decreasing, those payments must be made in full later.

About 760,000 Canadians applied for mortgage deferral programs from a chartered bank since the pandemic started. Canada’s large banks control about two-thirds of the mortgage market. That means one out of every six Canadian mortgage holders used the deferral program at least once since the beginning of the COVID-19 pandemic.

According to CMHC, Canadians deferred almost $1 billion in mortgage debt every month since the pandemic started. However, most of those programs were for six months or less, which means those who applied at the beginning already have to start making up those payments or will be soon.

As a result, fewer Canadians are likely to make extra payments this year. In last year’s report, two-thirds of Canadian homeowners planned to make additional payment on their mortgages in 2020. This year, only one in five borrowers expect to do it.

CMHC says existing mortgages are getting more payments added, with a new wave of mortgage debts. The number of new loans was up by 14% annually in Q1.