OSFI gradually closing mortgage deferral program

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More than three-quarters of a million Canadian mortgage holders initially deferred, many as a hedge against the future, says James Laird, co-founder of Ratehub.ca and president of CanWise Financial.

“The deferrals were pushed out quickly (with) pretty much no qualifying criteria. Pretty much anyone who wanted to defer their mortgage could do it,” says Laird. “Some of them would just have been building up a bit more of a rainy day cash reserve and some of them would be experiencing financial hardship.”

A majority who deferred are back to making regular payments.

Information culled from financial reports and through publicly recorded client conference calls shows the big banks reporting a sharp decline in the number of active deferrals. Some say as high as 90 percent of mortgage borrowers are back to making regular payments, others indicating normal payments have resumed for about 80 percent of mortgage deferrals.

“Everything I’m reading and seeing is suggesting that many, many Canadians are now back making their mortgage payments, but I think it stands to reason that the more challenging cases would still be outstanding and have yet to come to a head,” says Laird.

The OSFI’s decision to gradually phase out the requirement of additional capital does not rule out the banks’ ability to review on a case-by-case basis, says Laird.

“In regular times, lenders are used to working with borrowers who are experiencing some sort of difficulty. It is not totally unheard of where lenders, without the extraordinary support of OSFI, will make accommodations if they think there is a good chance the household is going to rectify itself,” he says. “If a mortgage holder needed another month or two and the lender understands why circumstances are going to change significantly, they’re very likely to extend a little longer, or I should say, they will consider it.”