Italy has suspended mortgage repayments for households and small firms hit by the coronavirus, and banks in the United Kingdom are beginning to follow with payment deferrals of their own, as Europe scrambles to cushion the economic blow of the outbreak.
In Rome, deputy economy minister Laura Castelli said mortgage repayments and other household bills would be paused “for households and individuals.” Tax bills and interest owed by small businesses and individuals are also being suspended while the crisis lasts. The country’s banking lobby, ABI, said lenders covering 90% of total banking assets would grant debt moratoriums to small firms and households caught up in the fallout.
Italy, with 60 million people under lockdown until April 3, is by far the worst-hit European economy so far, with 12,462 confirmed cases and 827 deaths. The UK has recorded 459 cases and 8 deaths.
British banks are moving more cautiously. RBS has said it will let customers defer mortgage payments for up to three months, and TSB will offer two months. According to the BBC, banks are preparing further relief for businesses and individuals who lose income because of the virus.
The relief is not evenly distributed. Only 13% of Italian households hold mortgaged properties, compared with 28% in the UK. Italian banks also carry about €382 billion of mortgages on their books, alongside €200 billion of bank bonds owned by households, a circularity that some analysts have already flagged.
The direction, though, is clear: expect more of Europe to follow as the outbreak spreads, with the details on how long the pauses last, and whether interest still accrues, still to come.
Sources
- Coronavirus Mortgage, Rent & Tax Relief In America vs. Italy & UK – The Basis Point
- Mortgage repayments suspended in Italy due to coronavirus | House & Garden
