The novel COVID-19 virus continues its global rampage, closing down businesses, keeping consumers from spending, and forcing companies to make drastic pay-cuts to save money wherever possible.
When it comes to mortgages, almost 4% of all mortgage loans are now in forbearance and the share is up from 2.74% (most recently) and just 0.2% in the beginning of March. For private sector mortgages from independent mortgage banks, the share loans in forbearance at even higher.
Mike Fratantoni, Senior VP and Chief Economist at the Mortgage Bankers Association (MBA) said:
"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."
On the other hand, mortgage rates are dropping and are expected to continue dropping while the market is in crisis. MBA forecasts fixed-rate loans to drop from 3.33% to 3.1% by 2021. Home prices are expected to drop as well.
The experience is the same in the rental sector, with tenants unable to pay rent. The National Multifamily Housing Council reported that a third of renters were unable to pay their rent for April and that deferment measures have risen while income is low and shelter-in-place orders are in motion.
How fast the market can jump back from this is still yet to be seen. Like every company, government, and individual, its a game of wait-and-see.