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, mortgages are typically the most significant asset on their retail banking book, and thus changes in originations, repayment schedules, and default rates have significant impacts on lenders’ profitability and liquidity.

Deloitte’s new report examines the immediate effects and ongoing 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. The report is built on a foundation of interviews with major lenders and Deloitte experts across these regions, as well as secondary research on the latest developments on COVID-19 and the residential mortgage market.

Topics covered in this report:

• What challenges does COVID-19 present to mortgage lenders? These operational and financial challenges represent an opportunity for lenders that are able to break the inertia of business models and adapt at a rapid pace.
• How have governments responded to support residential mortgage markets? Both governments and lenders have moved at breakneck pace to respond to these unprecedented challenges. Governments have launched a plethora of policies to support both borrowers and lenders.
• What have mortgage lenders done to respond to the crisis? The actions taken by institutions fall under three general themes: responding to influxes of volume; managing and stabilizing business risk; and positioning for recovery.