Monday, October 2, 2023
No Result
View All Result
  • Media
Support Us
Macdonald-Laurier Institute
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video
No Result
View All Result
Macdonald-Laurier Institute

Keeping people in their homes during and after COVID-19: Jane Londerville for Inside Policy

March 26, 2020
in Columns, COVID-19, Domestic Policy Program, Economic policy, Inside Policy, Jane Londerville, Latest News, Social issues
Reading Time: 3 mins read
A A

While many people are housebound, they are also worried about paying mortgages and rent. Recent government moves should help homeowners, but the renters may struggle, and mortgage interest will still pile up, writes Jane Londerville.

By Jane Londerville, March 26, 2020

This is an unprecedented time of uncertainty for Canadians. Aside from health concerns, COVID-19 is creating large economic uncertainties for both households and small businesses. The federal government has announced programs to at least partially replace income for those laid off or self-employed. Despite this, many Canadians are still left concerned about covering their expenses during the quarantine, particularly given lack of certainty about how long it will be until regular income restarts.  The most significant costs for most households and small businesses is mortgage payments or rent, property taxes, and utilities.

Canada Mortgage and Housing Corporation (CMHC), along with the other mortgage insurers in Canada (Genworth and Canada Guaranty), have announced they will work with the banks to allow borrowers to defer mortgage payments for up to six months.  While the announcement discusses the big six banks, a review of websites indicates secondary lenders are also willing to negotiate with borrowers. This has always been a quiet option for borrowers who were temporarily unemployed or had to stay home to care for an ill parent, for example.

This is not cost free to the borrower.  Interest will continue to accrue and compound on these missed payments.  Suppose a borrower has a $300,000 outstanding balance on their mortgage loan, at a rate of 3 percent.  If they stop making their payments for six months, the outstanding balance on the loan will rise to $304,500.  They then restart their payments but have an additional $4,500 owing on their loan.  Some may be able to increase payments or pay off this extra interest in some other way, however, most people, after missing six payments, would only be able to resume regular monthly payments so the interest would continue to accrue until the end of the term.

This is a sensible option for those who risk losing their house due to lack of income during this time. But borrowers who can maintain their mortgage payments should do so.  The announcement of the program has challenged the capacity of the banks to respond to requests for assistance.  The Prime Minister has asked borrowers to carefully consider not applying for relief if it is not necessary so that those who require the program to survive financially can access service.

This reduction in the flow of mortgage payments could pose cash flow issues for the banks.  To alleviate this, the CMHC has agreed to buy up to $50 billion of insured mortgage loans from lenders.  This is a strategy that was used during the global financial crisis to avoid liquidity problems in the financial sector in 2008-2009 and was highly successful in reducing the impact of the crisis on Canada’s economy. Since the CMHC is buying an asset when purchasing the loans, this is not a cost to taxpayers.

Homeowners also face the cost of property taxes.  It seems municipalities are moving to allow for deferred payments and removing penalties on missed tax payments.  This will help during times of reduced income but will leave households with a backlog of property tax payments when they return to work.

These are good stopgaps for homeowners.  But what about renters?  Its not clear whether landlords can apply for mortgage relief on rental properties, or if they would take advantage of this if they could to let tenants defer rent payments. There is no current relief for renters except through income support. Most provinces have banned eviction during the COVID-19 crisis. This helps tenants with security of tenure for the moment but those without secure income will have mounting rent arrears. Once the ban is lifted that could lead to a rash of evictions for those who cannot catch up. The income support Canada Emergency Response Benefit (CERB) program announced March 25 could assist with this dilemma.

Other costs for both renters and homeowners are utilities.  These are likely to be even higher than normal with people home all day needing adequate heat and spending increasing time on screens. Those working from home require electricity and Internet access to do their jobs. Some are using this downtime to complete their to-do list of home repairs, increasing electricity use. At this point the only relief announced is that in Ontario electricity will be available at off-peak rates for all usage regardless of time of day for 45 days. Most utility companies have policies that they do not cut off service during the winter months. Some have extended the date for this into the summer and others have indicated they are willing to work with customers on flexible payment plans for arrears.

The combination of income relief programs announced by the federal government and the ability to defer mortgage payments will likely allow most homeowners to weather this crisis.  Renters may struggle more.  And some households are likely to have accumulated debt to work off after the crisis is over.

Jane Londerville is a Munk senior fellow with the Macdonald-Laurier Institute.

Share this:
Tags: COVID-19economic policyeconomyhousingJane Londerville
Previous Post

How Taiwan is Leading by Example in the Global War on the COVID-19 Pandemic: New MLI Commentary

Next Post

Econ 101: Drug price controls shrink supply: Richard Owens in the Financial Post

Related Posts

Kishida’s mixed bag of successes and shortcomings: Stephen Nagy in the Japan Times
Columns

Kishida’s mixed bag of successes and shortcomings: Stephen Nagy in the Japan Times

September 28, 2023
MLI in Parliament: Richard Shimooka on defence procurement
Video

MLI in Parliament: Richard Shimooka on defence procurement

September 28, 2023
Conservative populism can break elitism and fix institutions: Jamil Jivani in the National Post
Columns

The dark reality of foreign transnational repression in Canada: Marcus Kolga in iPolitics

September 28, 2023
Next Post
Pan-Canadian Pharmaceutical Alliance Lacks Transparency and Accountability: Nigel Rawson for Inside Policy

Econ 101: Drug price controls shrink supply: Richard Owens in the Financial Post

Newsletter Signup

Follow us on

Macdonald-Laurier Institute

323 Chapel Street, Suite #300
Ottawa, Ontario, K1N 7Z2 Canada

613.482.8327

info@macdonaldlaurier.ca
MLI directory

Support Us

Support the Macdonald-Laurier Institute to help ensure that Canada is one of the best governed countries in the world. Click below to learn more or become a sponsor.

Support Us

  • Inside Policy Magazine
  • Annual Reports
  • Jobs
  • Privacy Policy

© 2021 Macdonald-Laurier Institute. All Rights reserved.

No Result
View All Result
  • Home
  • About
    • Who We Are
    • Who Makes MLI Work
    • Tenth Anniversary
  • Experts
    • Experts Directory
    • In Memoriam
  • Issues
    • Domestic Policy
      • Agriculture and Agri-Food
      • Canada’s Political Tradition
      • Economic policy
      • Health Care
      • Innovation
      • Justice
      • Social issues
      • Telecoms
    • Energy Policy
      • Energy
      • Environment
    • Foreign Policy
      • Foreign Affairs
      • National Defence
      • National Security
    • Indigenous Affairs
  • Projects
    • The Great Energy Crisis
    • Centre for Advancing Canada’s Interests Abroad
    • Dragon at the Door
    • Canada and the Indo-Pacific Initiative
    • The Transatlantic Program
    • DisInfoWatch.org
    • Competition Policy in Canada
    • Speak for Ourselves
    • Justice Report Card
    • COVID Misery Index
      • Provincial COVID Misery Index
      • Beyond Lockdown
      • COVID and after: A mandate for recovery
    • Indigenous Prosperity at a Crossroads
      • Aboriginal Canada and Natural Resources
    • Past Projects
      • The Eavesdropping Dragon: Huawei
      • Talkin’ in the Free World with Mariam Memarsadeghi
      • An Intellectual Property Strategy for Canada
      • Munk Senior Fellows
      • A Mandate for Canada
      • Confederation Series
      • Fiscal Reform
      • The Canadian Century project
      • Fixing Canadian health care
      • Internal trade
      • From a mandate for change
      • Size of government in Canada
      • Straight Talk
      • Labour Market Report
      • Leading Economic Indicator
  • Events
    • Upcoming Events
    • Past Events
      • MLI Dinners
      • Great Canadian Debates
  • Latest News
  • Libraries
    • Inside Policy
    • Papers
    • Commentary
    • Columns
    • Books
    • Video

© 2021 Macdonald-Laurier Institute. All Rights reserved.

IDEAS CHANGE THE WORLD!Have the latest Canadian thought leadership delivered straight to your inbox.
First Name
Last Name
Email address

No thanks, I’m not interested.