Canadians are taking up banks on their offer to defer mortgage payments.
Almost 500,000 Canadians have submitted requests for a mortgage deferral, or to skip a payment, after Canadian banks announced the option last month, according to the Canadian Bankers Association.
The leading bank association said Canada’s big six banks have deferred more than 10% of the mortgages in their portfolio after announcing a deferral program on March 17. The big six banks announced that they would be taking coordinated action to help alleviate the economic pressure from the pandemic. This included the creation of mortgage payment deferrals and relief on other credit products.
RBC, TD, BMO, CIBC, Scotiabank and National Bank of Canada are allowing eligible customers to postpone their mortgage payments for up to six months. In addition, Canadians have also been accessing pre-existing skip-a-payment options that usually allow for one payment deferral per year on certain mortgages.
The Canadian Bankers Association estimated that the deferrals approved so far are leaving roughly $663 million per month in homeowners’ pockets, based on Canada Mortgage and Housing Corporation data, indicating the average monthly mortgage payment in the country is $1,326.
Canadians who defer their mortgage will eventually have to catch up on the postponed payments. They may also face significantly higher interest costs over the life of the mortgage.
