Deferrals of Insured and Uninsured Mortgages

This analysis examines deferrals of insured and uninsured residential mortgages. The data is from the credit rating agency Equifax Canada, and is as reported to that agency.¹ The data covers approximately 80% to 85% of the Canadian market for residential mortgages and includes both insured and uninsured mortgages.

Since the beginning of the COVID-19 pandemic, payment deferrals on consumer debt peaked in June 2020. As at June 30, 2020, the following mortgage balances were in deferral:

• 18.7% insured
• 15.9% uninsured

Of the mortgage balance in deferral, 33.8% was insured and 66.2% uninsured. In figure 1,

• the average outstanding balance of insured mortgages in deferral was $248,687. This was 20.6% higher than the average balance of insured mortgages that were not in deferral.
• the average outstanding balance of uninsured mortgages in deferral was $283,313. This was 32.9% higher than the average balance of uninsured mortgages that were not in deferral.

Figure 1. Average outstanding balance of mortgages in deferral was higher than those not in deferral

Source: CMHC calculations using Equifax Canada data

The share of insured and uninsured mortgages in the total outstanding mortgage balance varied by region. So did the deferral rate, calculated as the mortgage balance in deferral as a share of the total outstanding balance. Figure 2 shows the deferral rates for insured and uninsured mortgages as at June 30, 2020. The deferral rate was higher for insured mortgages in all the provinces and territories, except Ontario.

Figure 2. Share of balance in deferral for insured and uninsured mortgages varied by province and territory

Source: CMHC calculations using Equifax Canada data

For banks and credit unions, insured mortgages accounted for a smaller portion (25.3%) of all residential mortgages that they held than did uninsured mortgages. A greater share of insured mortgages outstanding balance was deferred than for uninsured mortgages.

Deferrals of insured mortgages

• 19.5% for banks
• 20.3% for credit unions

Deferrals of uninsured mortgages

• 16.4% for banks
• 9.2% for credit unions

Among other lenders², the share of insured mortgages deferred was similar to the share for uninsured mortgages. Both were close to 16.0% as shown in figure 3. A greater proportion of the mortgages held by these other lenders was insured rather than uninsured. That means they can be less likely than banks and credit unions to experience losses if borrowers of deferred mortgages default after the deferral period ends.

Figure 3. Share of balance in deferral for insured and uninsured mortgages varied by lender group

Source: CMHC calculations using Equifax Canada data

The majority of consumers with mortgages held credit card accounts. Many of them also held:

• personal lines of credit (LOCs)
• auto loans
• home equity lines of credit (HELOCs)

The concurrent deferrals in both mortgage and non-mortgage consumer debt indicate the severity of the financial difficulties faced by these borrowers. In figure 4,

• for credit card debt held by consumers³ who deferred mortgages, 17.3% of the outstanding credit card balance was in deferral.
• for HELOCs held by consumers⁴ who deferred mortgages, 21.2% of the outstanding HELOC balance was in deferral.

The deferrals in non-mortgage consumer debt were lower for people who did not defer mortgage payments or did not have a mortgage.

Figure 4. Share of non-mortgage consumer debt balance in deferral was higher for consumers who deferred mortgages than those who did not

Source: CMHC calculations using Equifax Canada data

As at March 31, 2021, the total mortgage balance in deferral had decreased by 95.9% from its peak in June 2020. The total non-mortgage consumer debt balance in deferral had decreased by 96.5% during the same period.