Some mortgage payments on pause

Canadian banks have already received nearly half-a-million requests by borrowers to defer or skip mortgage payments in just a little more than two weeks, amid the swift financial uncertainty caused by the novel coronavirus pandemic.

The Canadian Bankers Association said Friday almost 500,000 requests had been completed or were being processed since lenders announced last month they would offer some financial relief, such as up to six months of deferred home-loan payments.

Borrowers quickly tried to take the banks up on their offer, flooding their phone lines with thousands of calls. The CBA said Canada’s six biggest banks have already deferred payments on more than 10 per cent of mortgages in their portfolio.

“The large number of customers who have been helped continues to grow as a result of concerted efforts by front-line workers, contact centre agents and operations teams working diligently,” the CBA said in a press release.

Combining the deferral requests with reports of slower real-estate activity and massive layoffs across the Canadian economy, the negative economic effects of the coronavirus are becoming clear.

Toronto-dominion Bank CEO Bharat Masrani said Thursday that the lender had approved 60,000 requests for deferrals so far, which was “virtually all” of the applications.

Asked about his confidence in borrowers being able to resume repaying their mortgages when the deferral period ends, Masrani noted the “unprecedented” levels of government support and the recent talk of the crisis easing in a few months.

“And if that’s the case, then I think the support provided should provide flexibility to Canadians who have taken on the deferral program,” Masrani told reporters following the bank’s annual shareholder meeting, which was conducted virtually due to the coronavirus.

Meantime, some borrowers are seeing more cash flow coming their way. The CBA noted in its press release, citing Canada Mortgage and Housing Corp., that the average monthly mortgage payment for a Canadian homeowner was $1,326. About $663 million in cash per month could be freed up by the deferrals, which borrowers could spend on other necessities.