Total outstanding mortgage debt in Canada had just stabilized last year when COVID-19 entered the picture, pushing debt higher at the beginning of 2020 and into the first months of the pandemic-induced lockdown period in April and May 2020, according to CMHC.

According to the annual Residential Mortgage Industry report, the total outstanding mortgage debt during the first half of 2020 partially reflected the trend in sales that concluded before the pandemic-induced shutdowns and mortgage repayments.

Canadian financial institutions have provided mortgage payment deferrals for up to six months to assist mortgage customers during COVID-19. These measures have resulted in a total of 760,000 deferred or skipped mortgage payments across chartered banks. Many non-bank financial institutions also allow deferrals and CMHC expects the total number of deferred mortgages to go higher.

Record number of homeowners defer mortgage payments

''We observed a surge in outstanding residential mortgage credit in the first five months of 2020,” said Tania Bourassa-Ochoa, senior specialist, Housing Research at CMHC. “This mortgage credit acceleration is a result of an increase in newly extended mortgages, given residential property sales were up late last year and early this year, and a record number of homeowners deferring their mortgage payments from impacts of pandemic-related economic shutdowns.''

CMHC says there is a risk that a significant number of mortgages will become delinquent in the third and fourth quarter of this year as the deferrals come to an end. This may be especially true given that 63 per cent of mortgages extended by banks were uninsured.