Americans are struggling. And if it wasn’t already clear from the 16 million claims for unemployment over the past few weeks, a look at the most recent mortgage forbearance data would prove as much.
According to the latest stats, nearly 4% of all mortgage loans are now in forbearance—a form of mortgage relief that allows homeowners to temporarily suspend their payments due to economic hardship. That share is up from 2.74% last week and a mere 0.25% in early March.
Loans serviced by independent mortgage banks are seeing the highest share of loans in forbearance at 4.17%.
According to Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, it’s just further proof that the current health crisis has put American households through the wringer.
“The nationwide shutdown of the economy to slow the spread of COVID-19 continues to create hardships for millions of households, and more are contacting their servicers for relief in accordance with the forbearance provisions under the CARES Act,” Fratantoni says.
Fortunately, there is a silver lining. According to MBA’s data, mortgage servicers are getting better at handling borrowers’ requests for relief.
Call center hold times are down for the week, clocking in at an average 13 minutes—an improvement over 17 minutes a few weeks ago. Call abandonment rates also dropped, with only 17% of callers giving up before receiving help. (In late March, a full quarter were abandoning their calls).
Other good news? It seems mortgage rates may continue to drop. Last week the average 30-year, fixed-rate loan saw a rate of 3.33%, according to Freddie Mac. The company’s newly updated housing forecast predicts those rates will drop even further, averaging 3.3% for the entire year and 3.1% in 2021. Home price growth is expected to decelerate, too.
As Freddie Mac’s chief economist Sam Khater puts it, “Undoubtedly, the housing market is facing its greatest challenge in over a decade as our nation weathers this unprecedented economic event.”
There’s still room for optimism, though—particularly as we get further into the year.
“Although the uncertainty of the crisis means forecasts of economic activity are more unclear than usual, we expect that most of the economic damage from the virus will be contained to the first half of the year,” Khater says. “Going forward, we should see a recovery starting in the second half of 2020, though it will take some time for the economy to fully bounce back.”