Banks’ flexibility key to easing virus impact
Banks have a key role to play lessening the economic impact of the Covid-19 pandemic on the real estate market and the lives of people left with little or no income, but still liable for mortgage or rent payments.
Steve Bowie, a chartered surveyor and registered property valuer, said it was vital that banks “remain as flexible as possible, working with those who find themselves in distress, due to no fault of their own”.
He said it was certain there would be an immediate economic impact from the pandemic, with people losing all or part of their incomes, government bailouts, and even those who retain their incomes feeling the effects as economies slow down.
Mr Bowie, of The Property Group, added: “We must not panic and start selling off what is, for most, our biggest investment and our homes. We will need to be adaptive and resilient, but above all remain positive.”
He said banks would continue lending because it was a source of revenue, and it was in their interests to keep the market buoyant.
“Since the financial crisis of 2007, the banks in Bermuda have tried to work with those people who have been struggling to meet their mortgage and loan repayments,” he said. “Where possible they have agreed loan restructuring to assist those in need.
“One must bear in mind the fact that the last thing any lending institution wants is to have to foreclose on their customers and repossess their homes, as such assets struggle to achieve market value. Significant numbers of foreclosures undoubtedly would have dragged the market down.”
While Bermuda's banks have waived interest on existing loans for limited periods, they cannot keep this up indefinitely, Mr Bowie said.
He added: “Nor will the waiving of interest be of much assistance to those parties who have lost their income and cannot make their repayments.
Another way the banks will impact the market is their willingness to grant loans and mortgages in these uncertain times. Our ongoing discussions with the institutions on this point have been positive.”
Mr Bowie said that while some people would be forced to sell their homes, property investments or second residences, the real estate market had strong demand from renters and potential purchasers since the lifting of some shelter-in-place restrictions this month.
He also believes the Bermuda Government could assist in both the flow of market information and activity by trying to speed up the time taken to approve licences for overseas purchasers and permanent resident's certificate holders.
He said: “This would enable the sales data to be released earlier as well as providing much needed income to the Government from licence fees and stamp duty. They may even consider reducing the licence fees to encourage such purchasers.”