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COVID-19: The impacts on global residential mortgage markets

As the COVID-19 crisis deepens across the globe, its impact on the financial services sector and individuals’ wealth and debt levels is becoming more severe. For individual homeowners, mortgage debt is the single largest source of debt, and has the greatest impact on their finances and their ability to stay solvent through wage decreases or wage losses. For lenders, residential mortgages are typically the most significant asset on their balance sheet, and thus changes in originations, repayment schedules, and default rates have significant impacts on lenders’ profitability and liquidity. As such, maintaining the continued health of the global residential mortgage market is critical to ensuring that countries can recover from, and thrive after, the COVID-19 crisis.

Institutions globally are grappling in similar ways with the acute stresses COVID-19 has placed on their operating models, their earnings, and their balance sheets. However, growth and recovery will not be uniform. The bestpositioned institutions will be able to fortify their businesses today, rapidly adapt to digital operations, proactively support customers, and take advantage of growth opportunities as they arise.

Deloitte’s Resilient Leadership framework defines three timeframes of the crisis: Respond, Recover, and Thrive. In this paper, we explore the “Respond” and “Recover” phases of the COVID-19 pandemic across global residential mortgage markets. We outline the challenges faced by lenders, and how both governments and leading institutions are responding to the crisis and recovering. We explore global economies

with large residential mortgage markets and significant exposure to COVID-19, including Australia, Canada, China, Europe, Latin America and the Caribbean, the United Kingdom, and the United States. We conducted interviews with major lenders and Deloitte experts across these regions and conducted secondary research on the latest developments on COVID-19 and the residential mortgage market.

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