What would the overall impact of suspending mortgage payments be on the U.S. economy? A Keller Williams economist weighs in.

Italy, one of the countries rocked the hardest by COVID-19 (coronavirus), effectively instituted a national lockdown this week and announced Tuesday that it’s temporarily suspending the payment of mortgages. The death toll from coronavirus is nearing 500 in Italy, with nearly 10,000 suspected cases, according to the latest numbers from The Guardian.

Laura Castelli, Italy’s deputy economy minister, told an Italian radio station Tuesday that individuals and households will temporarily not be required to make mortgage payments, according to BBC. During the global economic crisis in 2010, the country also temporarily halted some loan payments, BBC reported.

Ruben Gonzalez | Photo credit: Keller Williams

Ruben Gonzalez, the chief economist at Keller Williams, wouldn’t explicitly rule out a similar measure being taken in the United States. He explained there’s actually a precedent in the U.S. for Italy’s forbearance program, but here, it’s been more focused on victims of natural disasters like hurricanes and flooding.

“We are likely to continue to see government interventions and fiscal spending in an effort to alleviate some of the burden of the new coronavirus, as well as the impact of the nonpharmaceutical interventions (NPIs) being used to try and contain its spread,” Gonzalez said.

“The starting point for the U.S. economy is substantially more upbeat than that for the Italian economy, which is important to take into consideration,” Gonzalez added. “However, fiscal stimulus targeted at individuals who are impacted directly by the virus or indirectly by NPIs seem like a reasonable response from government officials, and we are likely going to see continued discussion of what kind of measures we may need to implement in the U.S.”

The U.S. does already have economic stabilizers in place — things like unemployment benefits — according to Gonzalez, but they may need to be re-examined or bolstered temporarily to alleviate some of the potential impact as the virus continues to spread.

As of Tuesday afternoon, more than 800 people in the U.S. have been diagnosed with the illness, and 27 have died.

Email Patrick Kearns

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