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Economic Brief

April 17, 2020

Richmond Fed Economists Forecast Loan Delinquencies for COVID-19

In the Richmond Fed’s latest Economic Brief two senior economists forecast the effects of COVID-19 on loan-delinquency rates under three scenarios for higher unemployment and lower house prices.

With no policy interventions, their model predicts peak loan-delinquency rates of 2.8 percent in a favorable scenario, 8.1 percent in a severe scenario, and 3.9 percent in an intermediate scenario. In the model, they find that the greatest reductions in loan delinquency are achieved through policies of mortgage forbearance and student loan forbearance. Fiscal transfers play a smaller role.

The Richmond Fed’s Economic Brief series provides web-exclusive essays on economic issues and trends. Sign up to receive an email notification when a new essay is posted.

As part of our nation’s central bank, the Richmond Fed is one of 12 regional Reserve Banks working together with the Board of Governors to support a healthy economy and deliver on our mission to foster economic stability and strength. We connect with community and business leaders across the Fifth Federal Reserve District — including the Carolinas, District of Columbia, Maryland, Virginia, and most of West Virginia — to monitor economic conditions, address issues facing our communities, and share this information with monetary and financial policymakers. We also work with banks to ensure they are operating safely and soundly, supply financial institutions with currency that’s fit for distribution, and provide a safe and efficient way to transfer funds through our nation’s payments system.


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