Alberta and Quebec lead the country in CMHC-insured mortgage deferrals

Quebec and Alberta lead the country in deferrals of mortgages insured by the Canada Mortgage and Housing Corp., says the federal agency, blaming it mostly on the economic crisis sparked by COVID-19.

Canada Mortgage and Housing Corp. says 2 provinces account for more than half of deferred mortgages nationwide

The head of the Canada Mortgage & Housing Corporation (CMHC) told a House of Commons committee this week that about 12 per cent of mortgage holders have opted to defer payments since the COVID-19 pandemic hit. (Ty Wright/Bloomberg)

Quebec and Alberta lead the country in deferrals of mortgages insured by the Canada Mortgage and Housing Corp., the federal agency said as it laid the blame mostly on the economic crisis sparked by COVID-19.

Quebec has the heaviest concentration of the total CMHC mortgage deferrals across the country, at 27 per cent, followed by Alberta at 26 per cent and Ontario at 21 per cent.

Here's how the other provinces ranked as a rough percentage of the total deferrals:

  • B.C.: 7 per cent
  • Saskatchewan: 5 per cent
  • New Brunswick: 5 per cent
  • Manitoba 4 per cent
  • Nova Scotia: 3 per cent
  • Newfoundland and Labrador: 2 per cent
  • P.E.I.: 0

Roughly 12 per cent of mortgage holders have elected to defer payments so far, Evan Siddall, the chief executive officer at Canada Mortgage and Housing Corporation, told the House of Commons standing committee on finance in Ottawa on Tuesday.

Not only that, Siddall warned: almost 20 per cent of Canadians who have CMHC insured mortgages could be forced to defer payments by September because of the economic crisis sparked by COVID-19.

The CMHC is the Crown corporation that backstops the vast majority of Canada's housing market by insuring the loans that finance it.

Siddall said the escalating number of deferrals could spell big trouble for the economy.

Mortgage deferrals, represented by the white vertical bars, are highest in Alberta and Quebec, according to CMHC statistics. (CMHC)

"Just as governments are taking on more debt to finance the COVID-19 response, mortgage deferrals are adding to already historic levels of household indebtedness," his prepared statement said.

CMHC is also forecasting a decline in average house prices of nine per cent to 18 per cent over the next 12 months, Siddall said.

"The resulting combination of higher mortgage debt, declining house prices and increased unemployment is cause for concern for Canada's longer-term financial stability," he said.

He said a team is at work at CMHC to help manage what he termed a looming debt "deferral cliff" — when some unemployed people will need to start paying their mortgages again. 

Siddall said the agency must now take steps to avoid exposing young people — and Canadian taxpayers — to the amplified losses that result from falling house prices.

"We are therefore evaluating whether we should change our underwriting policies in light of these market conditions," Siddall told the committee.

"Our support for homeownership cannot be unlimited. Homeownership is like blood pressure: you can have too much of it."

Siddall said the agency will take action to restrain its underwriting policies to rein in excessive borrowing, as well as promote urgent measures to accelerate the supply of rental housing. 

"CMHC has already taken steps to accelerate the delivery of funding under the National Housing Strategy, which is very much focused on creating more affordable rental housing for Canadians. The federal government is contributing billions of dollars to housing, along with provinces and territories."