Italy—the country hardest hit by the spreading coronavirus pandemic outside of China—has announced that mortgage payments will be temporarily suspended.
The move comes as the entire nation of 60 million people remains under lockdown in an attempt to slow the further spread of the COVID-19 virus. More than 10,000 people have been infected in Italy and more than 500 have died.
The policy will allow homeowners to defer their mortgage payments for up to three months.
In the U.S., too, the Democrats have proposed support for those affected by the virus that would include a six-month break for borrowers with mortgages and federal student loans. And the U.S. Federal Housing Agency "reminded mortgage servicers that hardship forbearance is an option for borrowers who are unable to make their monthly mortgage payment." UK lenders are providing relief to affected mortgagors as well.
Will Canada Freeze Mortgage Payments?
Prime Minister Justin Trudeau, when asked this question, told reporters, “We are looking at everything.” It’s possible the government could announce such measures before the number of infections spike. As more Canadians are forced into isolation and unable to work, it would provide necessary calm.
To date, the government has announced a $1.1-billion economic package in response to COVID-19. Half of the money will be transferred to provinces and territories to prepare their own coordinated responses and another $275 million will go towards increased research.
No specific economic-stimulus or payroll/sick leave-support measures have been announced, but the government has signalled that additional provisions are likely to be unveiled in its March 30 budget.
“Let me be clear: No one should have to worry about their job if they have to be quarantined. No employer should feel like they have to lay off a worker because of the virus,” Prime Minister Justin Trudeau said on Thursday. “We can support you. And we will. Today’s announcement is significant, but we’re already preparing to do more if need be.”
In the event there is no official government relief on mortgage payments, many lenders would work with borrowers to defer payments.
Lenders such as MCAP & RMG let borrowers skip a payment any time or defer a payment for a specified period of time. There are no fees and it doesn't impact the borrower's credit rating. These are timely features for folks experiencing income dips because of the coronavirus.
If worse came to worse and a mortgage were default insured, borrowers could contact their insurer. It’s likely that each of the insurers would help borrowers—for example, by deferring their payments some number of months while they’re laid off.