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Canada’s biggest banks have received nearly half a million requests from homeowners to hold off mortgage payments as the economic fallout from the COVID-19 pandemic deepens, according to the Canadian Bankers’ Association.

Since the banks announced a plan to provide financial relief over two weeks ago, almost 500,000 requests to skip or defer mortgage payments have been completed or are being processed, up from 213,000 on March 26, according to a statement from the association.

The delay in mortgage payments comes at a time when Canadian banks are seeing subdued earnings growth due to lower margins, increasing loan loss provisions and volatile performance in their capital markets divisions.

The Big Six lenders – Royal Bank of Canada, TD Bank, Scotiabank, Bank of Montreal, CIBC and National Bank of Canada – announced the coordinated effort on March 17 to offer mortgage relief to customers suffering pay disruption as businesses grind to a halt.

While homeowners can ask for up to a six-month deferral, it could cost them additional interest.

“The country’s six largest banks have deferred more than 10% of the mortgages in their portfolio,” the statement said.

Cash freed up for Canadians from deferrals completed so far is about $663-million a month, or nearly $2-billion a quarter, and this number will increase over the coming weeks, the association said.

A surge in deferrals usually points to a short-term liquidity crunch for lenders, but bigger banks are better-positioned to weather such a spike.

To meet demand for deferrals and loans, Canada’s biggest banks can access government liquidity support, including security purchases and also draw down from capital buffers.

On Thursday, Toronto-Dominion Bank chief executive officer Bharat Masrani said the bank has approved 60,000 or “virtually all” the requests for mortgage deferrals received so far as part of efforts to ease the impact of the COVID-19 outbreak on borrowers.

Source: The Globe and Mail