![\"\"](\"https:\/\/www.livabl.com\/articles\/wp-content\/uploads\/2019\/01\/canadian-household-debt.jpg\")
<\/a>Photo:\u00a0cPixs.com<\/a><\/em><\/p>\nReduced demand for housing and an increasing number of mortgages in arrears are two major impacts of the COVID-19 pandemic that threaten the Canadian housing market and broader economy. <\/p>\n
Thankfully, the federal government\u2019s stimulus measures will go a long way in helping Canadians avoid what researchers at Ryerson University’s Centre for Urban Research (CUR) call a \u201cdebt cliff.\u201d<\/p>\n\n
Diana Petramala and Hanna Chan Symth, two CUR researchers, published a weekly brief today that explores how the government programs currently in place will help reduce financial strain Canadians are experiencing through the pandemic.<\/p>\n
The CUR brief comes on the heels of brutal Canadian economic data released Friday from the first quarter of the year that already shows what Petramala and Smyth call the \u201ccarnage\u201d caused by the pandemic as it swept across the country. Economic activity fell 8.2 percent in the first quarter after strict lockdown and business closure measures were rolled out. The April data, which was not included in the release, is expected to be even more severe.<\/p>\n
The researchers identify a sharp decline in housing demand spurred by income loss and economic uncertainty and the financial stress caused by job loss leading to late mortgage payments \u2014 known as mortgages in arrears \u2014 as the central threats to the housing market.<\/p>\n
Petramala and Smyth first point to Bank of Canada commentary that says without quickly delivered government stimulus, the percentage of mortgages in arrears would have risen to 2.2 percent from the current 0.2 percent by the year\u2019s end, the worst level on record for the country\u2019s economy. Now with the stimulus measures in place, the number of mortgages in arrears is expected to rise only to 0.8 percent by the end of 2020.<\/p>\n
Measures that both CUR and the Bank of Canada noted are supportive of housing market stability are the Canadian Emergency Relief Benefits (CERB), the CMHC\u2019s mortgage purchase program and mortgage deferral programs from Canadian banks. The CMHC program is flagged as contributing to further reducing average mortgage rates on offer from lenders. The average currently sits at 2.2 percent, down 0.4 percentage points from 2019\u2019s average, according to data from Ratehub.<\/p>\n
The CUR researchers went on to zero in on the Ontario housing market, where mortgages in arrears sat at historically low levels in early 2020 prior to the pandemic. The number of mortgages in arrears in Toronto \u2014 at 0.1 percent as of the end of 2019 \u2014 was also much lower than the Canadian average. <\/p>\n
As the province\u2019s unemployment rate climbed as a result of the pandemic\u2019s impacts, Petramala and Smyth estimated that the share of mortgages in arrears would have risen to 0.7 percent in Ontario without government intervention. This would have equated to 18,000 mortgages with the country\u2019s six largest banks in arrears by the end of 2020, compared to only 1,800 at the beginning of the year.<\/p>\n
With the government stimulus, the percentage of mortgages in arrears is projected to be 0.4 percent, remaining lower than the Canada-wide figure, the researchers say. <\/p>\n
While the stimulus has helped avoid a far worse calamity thus far, the CUR team believes the housing market won\u2019t shake off the pandemic\u2019s effects for many months to come.<\/p>\n
\u201cThe anticipated hit to household income from the pandemic is likely to continue to weigh on housing demand through 2020 and 2021,\u201d Petramala and Smyth wrote.<\/p>\n
\u201cHowever, government stimulus measures will help avoid extreme financial stress in the housing market,\u201d they added.<\/p>\n
Thankfully, the federal government\u2019s stimulus measures will go a long way in helping Canadians avoid what researchers at Ryerson University’s Centre for Urban Research (CUR) call a \u201cdebt cliff.\u201d<\/p>\n","protected":false},"author":5,"featured_media":204111,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"content-type":"","apple_news_api_created_at":"2020-06-01T19:54:47Z","apple_news_api_id":"c6a2b409-5704-43bc-b011-47c81b779cbe","apple_news_api_modified_at":"2020-06-01T19:54:47Z","apple_news_api_revision":"AAAAAAAAAAD\/\/\/\/\/\/\/\/\/\/w==","apple_news_api_share_url":"https:\/\/apple.news\/AxqK0CVcEQ7ywEUfIG3ecvg","apple_news_coverimage":0,"apple_news_coverimage_caption":"","apple_news_is_hidden":false,"apple_news_is_paid":false,"apple_news_is_preview":false,"apple_news_is_sponsored":false,"apple_news_maturity_rating":"","apple_news_metadata":"\"\"","apple_news_pullquote":"","apple_news_pullquote_position":"middle","apple_news_slug":"","apple_news_sections":["https:\/\/u48r14.digitalhub.com\/sections\/09b86915-7d2b-3acd-915b-b215002d01b7"],"apple_news_suppress_video_url":false,"apple_news_use_image_component":false,"footnotes":""},"categories":[11269],"tags":[],"coauthors":[8652],"apple_news_notices":[],"yoast_head":"\n