The big Canadian banks haven’t been alone in offering a helping hand to customers suffering due to the economic fallout from Covid-19 — non-bank lenders have been giving their mortgage customers relief, too, according to new data from Statistics Canada.
For the first time, the national statistical agency published data on mortgages deferred by non-bank lenders, which show that these firms granted payment holidays to $25.4 billion worth of mortgages in the second quarter.
Two-thirds of these deferrals went to uninsured mortgages, StatsCan reported.
Uninsured deferrals represented $16.8 billion in loan value, and 65,346 mortgages. They also deferred 35,026 insured mortgages, valued at $8.6 billion.
Despite these deferrals and an array of government supports that were introduced in response to the pandemic, StatsCan also reported that the number of mortgages that fell more than 90 days into arrears at non-banks rose by 11.5% in the second quarter.
StatsCan said that this increase in households falling behind on their mortgages was likely driven by the spike in unemployment that followed the initial outbreak of Covid-19 and remained elevated in Q2.
Non-bank lenders reported 4,392 mortgages in arrears. The value of these loans was up 19.6% to just under $1.1 billion.
Again, two-thirds of these mortgages — $702.6 million worth — were uninsured.
Yet, even as the number of households running into payment issues rose, mortgages in arrears only represented 0.33% of the total value of outstanding non-bank mortgages.
StatsCan said that the effects of the pandemic on mortgage lending are expected to be even greater in the second half of 2020 and into 2021, as payment deferrals and government supports wind down.
Indeed, the housing market has so far remained relatively healthy despite the pandemic.
StatsCan reported that non-bank lenders added $47.9 billion worth of residential mortgages to their balance sheets in the second quarter.
“The growth in mortgages extended was likely driven by multiple factors, including low interest rates that incentivize mortgage refinancing, home re-mortgaging to generate income and increasing demand for larger homes during the pandemic,” StatsCan said.
The total value of outstanding mortgages held by non-bank lenders rose 0.2% in the second quarter to $331.0 billion. The number of outstanding mortgages was more or less unchanged at just under 1.7 million.