Big Six to allow slower repayments amid COVID-19 fallout
Canada’s Big Six banks are taking coordinated action on the mortgage front as the nation’s economy faces the uncertainty of the COVID-19 outbreak’s impact.
In a press release late Tuesday, Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank of Canada said that effective immediately, they will work with personal and small business clients to cope with the economic fallout of the virus, including introducing mortgage payment deferrals of up to six months and relief on other credit products for customers facing hardship.
“These measures are an important first step and underscore the resilience of Canada's financial system and the strength of our major banks,” the banks said in the release. “Banks will monitor evolving economic conditions and consider other measures if necessary.”
The move is just the latest in a flurry of actions impacting the domestic housing market. In recent days, the Canada Mortgage Housing Corporation (CMHC) has revived its crisis-era Insured Mortgage Purchase Program with the intention of buying back $50-billion in insured mortgage pools. Meantime, the Bank of Canada pledged to purchase billions in mortgages and mortgage-backed securities to bolster liquidity in the financial system.
Canada’s largest lenders have also been swift to slash their prime rates, with the Big Six cutting the benchmark rate 50 basis points for the second time in less than two weeks Monday, to 2.95 per cent from 3.45 per cent.
The prime rate underpins a range of rates on products, including variable-rate mortgages and lines of credit.