'There's a lot of fear' about defaults, raising mortgage rates even as BoC cuts: RateSpy's McLister

Almost 500,000 Canadians have submitted requests for a mortgage deferral or to skip a payment after Canadian banks announced the option last month, according to the industry's trade association.

In a press release on Friday, the Canadian Bankers Association said Canada’s largest six banks have deferred more than 10 per cent of the mortgages in their portfolio after announcing a deferral program on March 17.

Canada's six major banks announced that they would be taking coordinated action on March 17, to help work with clients to manage the economic pressure from the pandemic.

This included the creation of mortgage payment deferrals up to six months and relief on other credit products.

"Canada's banks are standing by Canadians and have stepped up to help our country work through these challenging times," Neil Parmenter, president and CEO of Canadian Bankers Association, said in a statement.

"The COVID-19 pandemic is the most urgent challenge our country has faced in recent memory, and banks will continue to make a positive difference for those who need their help and support."

In an interview with BNN Bloomberg, Parmenter said banks should be turning their attention next to access of low-cost credit.

“Particularly when there is an unexpected shock, someone needs a temporary income replacement. There are government programs but they are looking for some additional channels, and so when it comes to that there’s a much broader conversation into things like personal lines of credit and there are other personal credit products that offer a lower and more attractive interest rate than credit cards,” Parmenter said.

“At all times consumers should be taking a look at their portfolio of both credit and deposit products and finding the right mix for them and it’s always a good idea to have some options available to you for when there’s an unexpected shock.”