Over the last few weeks, the coronavirus—officially known as COVID-19—has brought most aspects of everyday life to a grinding halt. With each passing day in this new reality, it is becoming increasingly clear the economic crisis unfolding alongside this global pandemic could have lasting societal impacts once the health risks have subsided.
Interestingly, boating appears to be well-positioned to benefit as house-bound consumers have rapidly migrated in significant numbers towards boat dealers, marinas, ramps, and waterways yearning for the restorative and calming experiences only boating and water can provide.
While there are many challenges the recreational boating industry must navigate in the coming months, one looming issue in particular must be addressed in the near term if we are to position the industry for the future—keeping existing boaters in their boats and loans.
If we are to collectively weather this storm, marine lenders need to temporarily postpone boat loan payments for those who have been furloughed or laid off. This practice helps boat owners and business owners mitigate the financial burdens likely to emerge over the next few months, keeping our industry strong and adaptable throughout this challenging period.
Boating has always been a favorite pastime for families, regardless of income level—most boat owners have an annual household income of $100,000 or less. So, it is important to keep existing consumers in the lifestyle and on the water.
New boat sales following the Great Recession were nearly half of what they were beforehand, which in turn affected manufacturing jobs, causing the closure of 35% of our industry's dealers. If we don't act now, we're at risk of replaying this same situation all over again just when a massive wave of consumers has been knocking at our door in order to get on the water.
Postponing boat loan payments is not a radical idea; this practice is similar to efforts we are already witnessing from home mortgage lenders in their own responses to COVID-19. Bank of America announced last week that it will allow borrowers to defer mortgage payments on a case-by-case basis that can be extended on a month-to-month term. Additionally, the Department of Housing and Urban Development, Fannie Mae, and Freddie Mac announced they are suspending foreclosures and evictions for at least 60 days. Those announcements were also followed by the state of New York declaring certain borrowers in the state could forgo their mortgage payments for up to 90 days.
This week, NMMA and MRAA held calls with top leaders at the National Marine Lenders Association, and there was strong interest in helping but valid concerns related to organizing a coordinated banking response due to anti-trust regulations. Of course, any bank or lender can make this business decision on their own, as Bank of America, Chase, and Wells Fargo have done on the home mortgage front.
Allowing customers to defer their mortgage payments during the COVID-19 crisis is the right thing to do and good business. Other financial entities understand that the fallout from mass evictions would extend beyond homeowners and reverberate throughout the economy. Marine lenders would be wise to heed this approach and do the same. Such an action will keep current customers in their boats and open the door for a rapid, industry-wide recovery.
As we consider the many hardships that everyday Americans and businesses will face over the coming weeks and months, a family's ability to make payments on their boat should not be top of mind. Rather, many Americans will be looking to the outdoors and their favorite pastimes as a return to normalcy after this difficult period has passed. We are already seeing the pent-up demand for getting outdoors and into a boat play out across the nation. Marine lenders can assist in this transition, both for boat owners and the entire recreation boating industry alike.
Please join NMMA and MRAA in encouraging our valued consumer lending partners to defer existing boat loan payments for the duration of this crisis. The future consumer you might save may be your own.
Matt Gruhn is President of the Marine Retailers Association of the Americas (MRAA).
Frank Hugelmeyer is President of the National Marine Manufacturers Association (NMMA).