New Borrowing Rules

[EM Lawrence]

So how do you think the temporary restriction that only allows 50% of points to be borrowed will affect resale contracts? I’ve seen some pretty stripped contracts out there. I think this makes them even less appealing, because you are going to have to wait longer to enjoy the full point allotment. Thoughts?

 

[SL6827]

So is this something to do with the shut down? Or is this going to be a permanent change going forward? A new resale restriction?

 

[EM Lawrence]

It is related to the shutdown. And it is temporary, but I don’t think anyone knows for how long.

 

[SL6827]

It is related to the shutdown. And it is temporary, but I don’t think anyone knows for how long.

Oh, ok. Well I guess if it were to help with the issue temporarily. But could they make it a permanent resale restriction in the future?

 

[EM Lawrence]

I don’t know the answer to that question, but I don’t think so. I’m sure someone else will chime in. I was looking at it from the point of view of a potential buyer. I’ve seen contracts that won’t have any points load until 2022. If you were originally planning to visit in 2021, those points could still be useful to you as borrowed points. But if you can only borrow 50% of them (possibly, we don’t know how long this restriction will be in place) then those stripped contracts seem very unappealing to me.

 

[Lorana]

It’s less appealing to me, for certain. But admittedly that’s partly because we are planning a huge trip in 2021 timeframe for our 20th anniversary so we would be looking for 2020 points (as we have a Sept UY). Maybe 2021 points if we have to postpone the trip. But a stripped contract is far less useful to use if we can only pull in 50% points.

I’m glad people aren’t going to lose points with this new decision, but I’m crying inside because our plans did include borrowing all of our 2021 UY points into 2020. Now I need to rethink those plans

 

[OKW Lover]

I'm amused at all the things that people think/hope will reduce the price of DVC on the resale market. Obviously there are a lot of people who hope the prices will go down. I'm not one of them.

 

[sethschroeder]

It’s less appealing to me, for certain. But admittedly that’s partly because we are planning a huge trip in 2021 timeframe for our 20th anniversary so we would be looking for 2020 points (as we have a Sept UY). Maybe 2021 points if we have to postpone the trip. But a stripped contract is far less useful to use if we can only pull in 50% points.

I’m glad people aren’t going to lose points with this new decision, but I’m crying inside because our plans did include borrowing all of our 3031 UY points into 2020. Now I need to rethink those plans

I see you got married at the end of August. Could you straddle your use year? This could help you get around the issue of borrowing?

 

[EM Lawrence]

Do any of you DVC experts know if it is possible for banking/borrowing to be permanently changed or suspended? Or does the membership agreement state that those things can only be changed temporarily?

 

[SL6827]

It’s less appealing to me, for certain. But admittedly that’s partly because we are planning a huge trip in 2021 timeframe for our 20th anniversary so we would be looking for 2020 points (as we have a Sept UY). Maybe 2021 points if we have to postpone the trip. But a stripped contract is far less useful to use if we can only pull in 50% points.

I’m glad people aren’t going to lose points with this new decision, but I’m crying inside because our plans did include borrowing all of our 3031 UY points into 2020. Now I need to rethink those plans

Right, it is a double edged sword. But I think if Disney is trying to keep owners from losing their points, that does show that they may care to some extent. And maybe that is a bit of the Disney difference that is still left.

 

[SL6827]

I'm amused at all the things that people think/hope will reduce the price of DVC on the resale market. Obviously there are a lot of people who hope the prices will go down. I'm not one of them.

The prices were bound to go down at some point. A recession/correction was looming regardless. But this situation is more than I think anyone ever seen coming.

 

[OKW Lover]

The prices were bound to go down at some point. A recession/correction was looming regardless. But this situation is more than I think anyone ever seen coming.

The problem with this logic is that it ignores the fact that Disney controls the pricing on the secondary market through its RFR option. If the price goes too low, they just take the contract and then turn around and sell it at full price a few months later.

And no, I don't think that they are so cash strapped right now that they can't afford a few thousand to buy the typical resale contract.

 

[Lorana]

I see you got married at the end of August. Could you straddle your use year? This could help you get around the issue of borrowing?

If we end up switching to August, yes.
Amusingly, we got married in August because our friends & family voted on August. After experiencing Disney in August, they’ve begged us to never drag them to Disney in August again.

so we were planning a week over February school vacation with family in 2021, and a week over April school vacation with friends in 2021, and then do a cruise over our actual anniversary.

That said, I’m feeling dubious about traveling in Feb and April next year, as I expect to see a resurgence - made worse by flu season - this winter, so we’ll see.

If so, we’ll hope for August, and if we have to move it to 2022, so be it!

 

[Matty B13]

With these new restrictions, maybe DVC will rethink their pricing on direct contracts. If you can't borrow points for the foreseeable future, can people really afford to pay direct pricing to get the reservation that they want every year, instead of banking and borrowing points to get the stay they want. I'm sure they don't want to drop their prices, but this might be the first event that has happened that might cause them to drop their direct prices.

 

[Great3]

So is this something to do with the shut down? Or is this going to be a permanent change going forward? A new resale restriction?

Well, this affects all owners, not just resale owners. Direct owners can only borrow 50% of points also. It makes ownership less flexible, and let's hope it's temporarily, and not for a long time.

Great3​

 

[Great3]

Do any of you DVC experts know if it is possible for banking/borrowing to be permanently changed or suspended? Or does the membership agreement state that those things can only be changed temporarily?

They have the right to change banking and borrowing rules at anytime they want, permanently, and suspended it completely. That's exact how the rules were written in the first place. Good luck to all us owners going forward that we get the flexibility that makes DVC membership so great.

Great3

 

[SL6827]

They have the right to change banking and borrowing rules at anytime they want, permanently, and suspended it completely. That's exact how the rules were written in the first place. Good luck to all us owners going forward that we get the flexibility that makes DVC membership so great.

Great3

Wow, I had no idea.

 

[sethschroeder]

With these new restrictions, maybe DVC will rethink their pricing on direct contracts. If you can't borrow points for the foreseeable future, can people really afford to pay direct pricing to get the reservation that they want every year, instead of banking and borrowing points to get the stay they want. I'm sure they don't want to drop their prices, but this might be the first event that has happened that might cause them to drop their direct prices.

Just a different method. Bank 50% borrow 50% and you still get 2 years of points.

 

[Great3]

Wow, I had no idea.

This is what it says in the basic banking / borrowing rules:

"To maintain a proper balance of Vacation Points in the central reservation system, banking may be suspended or limited from time to time."

"To maintain a proper balance of Vacation Points in the central reservation system, borrowing may be suspended or limited from time to time."

They left themselves plenty of leeway to change whatever and whenever needed.

Great3

 

[spunkylouamanda]

I don't foresee this having too dramatic of an impact on resale contracts. Many people who are looking at resale contracts now after the Covid pandemic started in mid-March are going in with an open mind that they may not get to the parks in 2020 anyways. That's just my two cents.