Over the course of the COVID-19 pandemic, we published three Financial System Hub articles about payment deferrals in Canada (with data through to September 2020, December 2020 and March 2021). This article presents a final update of household debt payment deferrals through to July 2021. The original article provides additional details on the characteristics of debt payment deferrals by borrowers.
As of July 2021, all loan deferrals granted in 2020 except for credit cards have ended (Chart 1). Arrears among borrowers with expired deferrals continue to exceed pre-pandemic rates across all products but are trending down since our last update (Chart 2a). As previously reported, renters tend to experience higher levels of financial stress than homeowners (Chart 2b). Overall, most borrowers with expired deferrals have resumed making regular payments.
The lack of a noticeable increase in payment arrears despite the large economic disruption caused by the pandemic is encouraging. This reflects several factors:
- While many Canadians remain unemployed, employment and economic activity have rebounded strongly from their troughs in spring 2020.
- Policy-makers have provided households with considerable financial support and continue to do so.
- The Bank of Canada, through monetary policy actions, has pushed short- and longer-term interest rates lower, making credit more affordable for households.
Although this is our final update on debt payment deferrals, we will continue to monitor household debt repayment. The Bank will communicate relevant findings through other avenues, such as speeches and the Financial System Review.