October 14, 2020, by Stephanie Hughes
While the rate of mortgage deferrals in Canada remains in the double-digits, it has been on the decline in recent months, blunting concern of a looming ‘debt deferral cliff’.
Data collected by the Canada Mortgage and Housing Corporation (CMHC) and made available to Yahoo Finance Canada show that deferrals fell to 10.89 per cent in August from 12.28 per cent in July.
The data did not come as a surprise to CIBC senior economist Benjamin Tal, who says debt deferrals will not be as severe a problem as many initially thought. Interest-only mortgages and longer amortizations could be on the table to provide Canadians the flexibility they need to keep up with payments, he added.
Among higher income Canadians, deferring mortgages provided an opportunity to park extra funds in savings, as they also scaled back on discretionary purchases during the pandemic.
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