The deferral program itself is premised on OSFI's exemption of banks in terms of increased....
What would have otherwise happened is that these loans would have been considered non-performing. The moment they become non-performing, all of a sudden the banks need to put up more, in terms of capital, to back them. It's not to say that those people are bankrupt; it's just that the banks need to put up more money to back them. As a result, those are tangible increased costs for the banks, particularly when in some cases 18% of all mortgages are in a deferral position. This change to the OSFI rule that provides material benefit to the banks allows for this deferral program.
I would certainly argue that this benefit that OSFI has provided to the banks could be used, or committees like this one could request that the banks, in trade for this rule change, defer penalties as well as interest charges over the period of the deferral. This would be much more important for credit cards and lines of credit; it could be useful for mortgages, as well.
I think that we haven't really encountered this yet because the deferral program is in place, so anyone who has difficulty paying a mortgage would go into the deferral program. It's really when the deferral program starts to wind down that we'll see this start to play a much bigger role, the penalties for prepayments of mortgages. This is particularly true for fixed-rate mortgages. It exists for variable-rate mortgages, but they're lower, generally.
I think that, in preparation for that, this committee could discuss this with banks and encourage them to waive most or all of the penalties of prepayments of mortgages as Canadians attempt to downsize. If job losses that people thought were temporary become permanent or if the deferral period is over and they still don't have a job and they need to downsize, I think we need to make it as easy as possible for people to do that without undue penalties that would have to be paid to break mortgages.