Central American Mortgage Response to COVID-19

December 13, 2020
Antonio Flores

The coronavirus and the associated lockdowns have drastically changed land use all around the world. Since the events of this year, millions of buildings around the world are going unused, as corporations switch to work-from-home policies. Formerly expensive apartments near jobs and entertainment now find their prices to be unjustifiably high in the eyes of their renters, as even their touted amenities are not open for months. Millions of people found themselves unable to pay the rent or mortgage, as they were left without work for months, . Because of this, governments have had to make major policy adjustments to deal with the crisis, to prevent huge numbers of evictions this year. Governments across Central America and the Caribbean have diverged greatly on their response to the economic problems associated with the mortgage-related fallout of the pandemic and the corresponding lockdown.

First, we have the nation of Nicaragua. The government of Nicaragua has barely taken any measures at all to deal with the pandemic. The government never locked down anything, never passed a mask mandate, did not evacuate the hospitals, and for the most part left the borders open. The economy was not hurt nearly as badly there as in other places, even though most airlines cut off all service to the country. Accordingly, they have not made any changes at all regarding the mortgage and land use situation. 

In the Dominican Republic, there have been a variety of banking-related changes, such as reduction of interest rates and changes to the repo market, but there has not been any particular amendment to the mortgage or rental policies. However, there have been major subsidies to low-income families in the wake of the recession, subsidies which will hopefully keep most of them in their homes and help them avoid eviction from their land. 

These two are the most noteworthy policies: No countries in Central America or the Caribbean have implemented either drastic policies such as rent freezes or more lenient ones like 12-month mortgage deferral. It is the area with by far the least action on the economic front. Many of these are poor countries, but the poverty alone does not explain it: South America has many poor countries which locked down far more than Central America, and whose governments made more economic policy decisions.

Governments across Central America have played a major role over the past ten months in dealing with the mortgage and eviction crisis in their countries.  

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