Yes, I'm certainly happy to.
Quite simply, when the mortgage deferral programs were first created, all banks and lenders, as regulated by OSFI, have to retain additional minimum capital for any loans that are non-performing. It's prudent, of course. They need to have a stockpile of cash in the event that the loans that are currently in arrears don't ever actually find their footing and make their way to repayment.
Therefore, as a means to assist with the liquidity of the banks and allow them to continue to extend credit, OSFI agreed to allow deferred loans, specifically, not to be considered non-performing, which means that the banks do not have to set aside that additional minimum capital.
As reported at the beginning, the CBA says that somewhere around 16% of mortgage holders have deferred their mortgage at some point. We're actually seeing that number reduce, which is great to see and what we would hope to see as the economy comes back, but we do expect there will be pockets, which will be quite industry-specific, that are going to take a little more time.
If OSFI were to allow for an extension of the deferral program with some parametered constraints—and here I think that a 5% as a maximum allowable target within a mortgage portfolio is quite reasonable—to allow the banks themselves to set parameters around how they're going to means test, or who is actually going to be eligible to enjoy a continued deferral, there will, of course, be assessments of expected future earning capacity for the folks the banks would extend this to. It would be a nice accommodation for the folks who are likely still going to feel the effects of COVID for a little while longer, and for the banks to have the financial flexibility or freedom to be able to provide that extension as well.