When the pandemic hit Canada in March, and we were asked to stay at home, and that all but essential services remain open, many were concerned about how they were going to pay the bills, including their mortgages. To their credit, lenders and mortgage insurers stepped up to the plate and offered homeowners the option to defer their mortgage payments by up to six months.
That strategy worked. The number of Canadians who asked for a deferral or a skip-a-payment was 778,000. Roughly 32% of Canadians who opted to defer their mortgage payments (254,000) have resumed payments as of August 31.
The deferrals ended on September 30, and while many have now resumed payments, some homeowners may be still struggling if their employment situation hasn’t improved, or if there are now other unexpected circumstances.
There was some talk that the Canada Mortgage and Housing Corporation (CMHC), along with the private insurers, might step forward to assist these homeowners, through extended amortizations, special payment arrangements, and/or adding missed payments to mortgage balances.
CMHC and the private insurers have not confirmed any details yet but they continue to monitor and review situations on a case-by-case basis.
For those still affected by the COVID fallout, a quick review of lenders found that many are willing to assist those still struggling. If you are one of those homeowners looking for options, consider these suggestions:
- Borrow from a line of credit. This is fine if there’s a short gap between payments restarting and when you go back to work.
- Ask for a deferral extension. Lenders don’t want to take your house and will work with you to come up with a solution.
- Skip-a-payment. Many lenders offer alternative options such as skip-a-payment for example that you can explore.
However, some Canadian homeowners may exhaust their options and may find themselves deciding to sell. In that case, the housing market news is good. The market has remained surprisingly strong in many parts of the country, supporting many sellers, unlike previous economic downturns.
In July, for example, average home prices were up a shocking 14.3% compared to the same period last year, according to the Canadian Real Estate Association. And home sales hit an all-time monthly record in August as reported through the Canadian MLS Systems.