Banking watchdog says no plans to bring back special treatment for deferred loans despite second wave
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“Obviously, if we get into a situation where blanket decisions again are required then, of course, we’d have to consider making a further change or perhaps reversing our previous decision,” Rudin said Friday during a conference call with reporters. “But that’s not the situation in which we find ourselves.”
Yet Rudin’s comments come as Canada’s COVID-19 cases have been shooting up again, prompting some governments to reimpose restrictions on certain businesses, and as a number of borrowers are still deferring loan payments. Meanwhile, loan and premium payment deferrals granted after Sept. 30 are no longer subject to OSFI’s special capital treatment.
32% of the 778,000 people who deferred their mortgage payments have resumed repayment
Still, OSFI said in August that the decision to wind down the special treatment reflected that the measures were meant to be temporary, and that the financial institutions were still free to grant deferrals on a case-by-case basis if they so chose. According to the Canadian Bankers Association, more than 778,000 people had been allowed to defer or skip their mortgage payments as of the end of August, with approximately 32 per cent of those people having resumed repayment.
“There’s nothing that prevents banks from continuing to offer deferrals,” Rudin said. “We’re just phasing out the extraordinary capital treatment because it’s no longer necessary.”
Rudin’s comments on Friday also came after the regulator and the Bank of Canada had just finished hosting a virtual get-together for financial watchdogs, the International Conference for Banking Supervisors.