Housing markets in Canada are on the mend. Sales data from the Greater Toronto Area showed considerable increases in sales and prices in August. With the mortgage deferral programs set to expire in September and October, housing market recovery might lose steam or even face significant challenges.?
Earlier in March, the uncertainty about the resumption of economic activity and the public health impacts of COVID-19 was high. Many borrowers, who were uncertain about their jobs, opted for mortgage deferral as a precaution. By mid-April, 600,000 borrowers had applied for mortgage deferrals. At its peak, over 700,000 mortgages had been in some form of a deferral representing 16 per cent of borrowers.
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Evan Siddall, President and CEO of the Canada Mortgage and Housing Corporation (CMHC), alerted that by October, the financial system might approach the debt-deferral cliff, when loan forbearance programs end and borrowers must start making payments again.