Millions of Americas continue to face severe financial hardships through the pandemic, and with no end in sight, that’s not a great sign for leisure travel when business travel is already down.
As the pandemic continues, hoteliers everywhere are rightfully concerned about what the drop in demand means for their debt payments. There is another type of debt they should worry about as well: home mortgages.
The Wall Street Journal reports that more than 1 million borrowers are behind on their home mortgage payments by more than 30 days and aren’t in a forbearance program. The good news is that 680,000 of those are federally guaranteed mortgages, qualifying them for a forbearance plan under a law passed in March. The remaining mortgages are through lenders that aren’t required to offer such a program, but many of them are anyway.
Under a forbearance program for a federally guaranteed mortgage, homeowners can skip payments for up to a year without facing a penalty but must make up for the missed payments later. All it requires is calling the mortgage company and asking for it. The problem is too many aren’t aware this is an option.
“Many people have instead fallen behind on their payments, digging themselves into a deepening financial hole through accumulated missed payments and late fees,” the article states. “They could be at risk of losing their homes once national and local restrictions on evictions and foreclosures expire as early as January.”
Keep in mind these figures are for homeowners. That doesn’t include those who are renting. While this article from The New York Times doesn’t break it down between renters and homeowners, it’s clear that renters have been having trouble with their monthly payments as well.
These problems are the result, of course, of people losing their jobs as businesses shut down or cutback through the pandemic. The Wall Street Journal reports that the latest numbers from the U.S. Department of Labor show weekly initial jobless claims fell by 33,000 to a seasonally adjusted 860,000 for the week ending 12 September. The number of people collecting unemployment benefits through their state programs dropped by 916,000 for a total of about 12.6 million for the week ending 5 September.
The official unemployment rate fell to 8.4% in August, but many economists believe the full unemployment rate is more than 11% accounting for misclassification of workers as well as those who are no longer seeking work out of frustration or for health-related reasons, CNBC reports.
The pandemic has stretched on for most of the year and won’t end as we turn our calendars over to 2021. States’ unemployment benefits typically last about six months, so we’re reaching a point when many people have exhausted those. The federal unemployment assistance ended a while ago, and the one created by executive order is smaller and lasts for an even shorter amount of time.
All of these factors combined don’t paint a rosy picture for leisure travel in the fall and winter. Leisure has propped up the hotel industry this summer after states reopened with business travel still significantly down, but we are now in the middle of September with October quickly approaching. When you factor in just general health concerns with the number of people who are still unemployed—and let’s not forget those who are underemployed—facing harsh financial challenges regarding their basic necessities, taking a trip won’t be high on the list of priorities for a lot of people.
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