On April 1, millions of newly unemployed workers faced the prospect of having to pay their rent or mortgage even as the COVID-19 pandemic had all but shut down industries nationwide.
In some states, citizens have pushed for a freeze on housing payments, many going so far as to collectively refuse to pay rent. As unemployment rates hit record highs, few state legislatures have yet taken any action.
Governments of the European countries that have been hit hardest by the pandemic and the resulting economic downturn are also trying to discern the best ways to offer financial assistance to the companies and citizens most affected.
Mortgage and rent freezes in the US
On March 31, the national parent-led organization, ParentsTogether Action, announced in a press release that more than 400,000 people had signed their petition urging the United States Congress to suspend rent, mortgage and utility payments nationally.
The group stated that loss of employment due to social distancing had left families having to choose between paying bills and buying food.
While Congress has not yet acted to freeze home payments, The Hill reported that several state governors were negotiating with banks to enact a temporary mortgage freeze. This would allow homeowners to pause their payments for up to 90 days. A similar freeze for those who rent their homes has not materialized, though public pressure to do so has continued to build.
Chicago is one of many cities in the US where residents have organized rent strikes which involves a group of tenants in a rental property who collectively refuse to pay rent.
There have also been calls for Chicago to officially declare a rent freeze. But while the city’s mayor, Lori Lightfoot, has urged landlords to provide a grace period for rent, state officials say a 23-year-old ban on rent regulation prevents the city from being able to push forward measures, like a rent freeze, that would benefit citizens.
In late March, the two remaining Democratic presidential candidates, former Vice President Joe Biden and Senator Bernie Sanders, spoke out in favor of a three-month freeze on rents. The two candidates also stated their support for statewide injunctions against evictions, such as those enacted by California Governor Gavin Newsom.
US unemployment rate skyrockets
According to data released by the Department of Labor this week, 6,648,000 people filed unemployment claims in the week ending March 28. This followed 3,307,000 claims that had been filed the week before, resulting in a total of nearly 10 million unemployment claims filed over a two-week period.
For the month of March, the average weekly total of claims filed was greater than 2 million.
As reported by NPR, these numbers are an early indicator of just how bad the coronavirus crisis could be for the American economy. The national unemployment rate is expected to skyrocket to 15%, and experts say higher unemployment is likely.
So far, employment claims have already reached record numbers that have shattered past highs. To compare, in March 2009, at the height of the Great Recession, there were only 665,000 weekly claims. Even the all-time high, set in October 1982, of 695,000 claims is dwarfed by the current numbers.
Despite the historic severity of these numbers, expectations are that they will get even worse. This is because the latest unemployment claims were announced before the Trump administration recommended social distancing guidelines be followed through the end of April.
However, some officials also say that the current downturn isn’t the norm and thus current numbers aren’t important.
The jobless numbers “right now aren’t relevant,” since many of these individuals should be rehired after the government’s US$2.2 trillion economic relief package is implemented, said US Treasury Secretary Steven Mnuchin.
Trump had previously expressed hopes to ease such restrictions by Easter, on April 12, against the advice of public health experts.
European mortgage freezes
Countries all over the world are currently dealing with similar economic woes as the pandemic’s death toll continues to rise.
In Europe, where the crisis has worsened despite strict nationwide lockdowns in multiple countries, governments have been seeking ways to protect their citizens.
Italy has experienced the deadliest brunt of the virus, with an official death toll that surpasses every other nation on earth. This despite most of the country having been in lockdown since the early weeks of March.
When Italy’s lockdown was first ordered, the Italian government also included a mortgage freeze as part of their coronavirus response. The freeze, which came as more than 60 million people in the country were banned from traveling, extended to cover some tax payments.
In Spain, where the infection rate has continued to grow despite a national lockdown, the government passed a €200 billion bailout that included a mortgage freeze for any families struggling as a result of the crisis.
That financial boost, which also provides help for corporations and beefed-up unemployment payments, is equivalent to nearly one-fifth of Spain’s GDP.
On April 2, The Guardian reported that the United Kingdom was moving to enact even stronger measures.
Financial regulators there were looking to freeze all payments on loans and credit cards as early as April 9. This action was aimed at helping renters and consumers who wouldn’t be directly helped by the mortgage freeze the UK had already enacted.
[article_ad]
Have a tip or story? Get in touch with our reporters here!
