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TOPLINE
Americans have skipped payments on more than 106 million different loans, mortgages and other types of debt since the month of March, when the coronavirus hit the country, highlighting the economic impact of the pandemic, according to a Wall Street Journal report.
Economic hardships caused by the pandemic have led to over 100 million people deferring their loan … [+]
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KEY FACTS
The number of accounts that requested deferred payments, forbearance or any other similar type of relief since March 1, and continue to stay in such a state, stood at 106 million at the end of May, the Wall Street Journal reported.
The numbers at the end of May are three times larger than what they were at the end of April, signalling a steep increase in economic hardship, according to the report.
Student loans saw the largest increase, with 79 million accounts seeking deferment or other forms of relief, up from 18 million in the previous month.
7.3 million auto loan accounts have also sought similar relief along with 1.3 million personal loans.
Key Background
The report of a steep increase in missed loan payments comes after the pandemic lockdown forced 45 million Americans to file for unemployment benefits. The government, in some cases, has instructed companies to let borrowers defer payments, and the stimulus package signed in March, allowed most borrowers to stop making monthly payments till September 30, on federal student loans. The stimulus package also allowed homeowners affected by the pandemic to request permission for a 12-month pause on mortgage payments. Additionally, many credit-card, auto-loan and personal-loan lenders continue to allow consumers to skip or pause payments. The number of people seeking deferred payments could continue to rise as members of the Trump administration have signalled that the additional $600 a week unemployment benefits, which are set to expire on July 31, may not be extended further. In April, a survey by the credit reporting agency Experian estimated that nearly 77% of borrowers have either sought or plan to seek relief on loan repayment due to the economic downturn.
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