Home owners who are having financial difficulties as a result of the new coronavirus (Covid-19) pandemic and the measures taken to combat it, are to be allowed to postpone mortgage repayments until September, federal finance minister Alexander De Croo (Open VLD) has announced.
The same postponement is being opened up to companies and the self-employed who have other types of loans to repay. The measure is part of a package put together by the federal government together with the National Bank and the financial industry regulator Febelfin.
The postponement means the client has to pay no extra interest, but the measure only applies to those who are experiencing financial difficulties as a result of the virus or the measures taken to fight it. For example, if the home owner has been unable to work or do business because of the enforced closure of a business or a client’s business.
“Those who have loans with the banks can ask at their bank branch not to have to make any more payments between now and 30 September,” De Croo said.
“Families who can show a financial effect of the corona crisis, for example temporary unemployment, can do the same,” he said.
The government has also worked with the financial sector to create a guarantee scheme with a fund of €50 billion to cover losses incurred on future loans. The fund will cover all new loans to companies and the self-employed granted from now that run for a maximum of 12 months.
The aim of the fund is to allow new loans to be made, which may be necessary to keep a business in difficulties afloat until the economy recovers.
The financial sector will carry the burden of most of the losses.
“Losses up to 3% of the capital loaned will be fully borne by the financial sector,” De Croo said. “Losses of between 3% and 5% will be shared – half for the government and half for the financial sector. Losses that are greater still will be borne for 80% by the government and 20% by the financial sector.”
To put the figures into perspective, the global financial crisis of 2008-2009 saw losses totalling 1%. The current guarantee fund will be borne by the financial sector to a point where losses are three times worse than they were then.
“If we go deeper than that, it seems to me only logical that the government should intervene,” he said.