Measures implemented by the Federal Government and the CMHC to alleviate the economic impact of COVID-19

On March 16, the Government of Canada, through the Canada Mortgage and Housing Corporation (« CMHC »), launched a revised Insured Mortgage Purchase Program (« IMPP ») under which, the Government would undertake the purchase of $50 billion of insured mortgage pools through CMHC. The purpose is to provide stable funding to banks and mortgage lenders to ensure continued lending to Canadian consumers and businesses. On March 26, the CMHC announced that it was increasing its IMPP to $150 billion.

The purchase of these mortgage pools by CMHC will provide financial institutions with additional funding which they will then be able to use to extend new loans to assist businesses and other borrowers. Given the context, this is excellent news for the Canadian real estate industry. These measures will allow Canadian financial institutions to extend more loans, thereby facilitating the recovery of our economy once the crisis is over.

This new program enhances the substantial set of measures already announced on March 13 by the Government of Canada to support the economy and the financial sector. It ensures the proper operation of markets and continued access to financing by Canadian corporations throughout the duration of the COVID-19 crisis, including:

  • $10 billion credit facility to lend money to businesses, available through the Business Development Bank of Canada and Export Development Canada
  • Easing of the Office of the Superintendent of Financial Institutions (OSFI)’s requirements relating to the Domestic Stability Buffer that must be maintained by Domestic Systemically Important Banks
  • Launching of a new bankers’ acceptance purchase facility
  • Increasing Government of Canada bond buybacks to add market liquidities and support price discovery
  • Lowering by the Bank of Canada, for the third time in March 2020, of its policy rate which stands, as of this date, at 0.25%; several Canadian banks have applied these adjustments, setting their preferential rate for Canadian customers at 2.45%

COVID-19 related Mortgage Payment Deferral Program  

Residential homeowners who are unable to meet their upcoming mortgage loan instalments after losing their employment or as a result of a decrease in hours worked may request a mortgage payment deferral at any time during the outbreak.

The agreement is concluded between the homeowner and his lender and provides for the deferral of mortgage payments until the end of the agreement. The payments so deferred are not cancelled or erased and must have been made at the end of the agreement, along with the interest accrued thereon. The deferral agreement applies only to mortgage instalments and not to other payments, such as real estate taxes or life or disability insurance, which must be made when due at all times.

CMHC recommends that homeowners contact their lender to make arrangements. You can also check with your legal counsel regarding commercial real estate matters.

By Nicolas Lanthier

Photo Credit: Freepik