Fewer Americans call their mortgage officers to ask for help from mortgage payments, but the housing industry hasn’t come out of the woods yet.
More than 4.1 million homeowners are in patience plans now, according to the latest data from the Mortgage Bankers Association.
While mortgage officers are still facing pressure due to the many requests for repayment, signs indicate that the prospect of homeowners has increased as parts of the country began to emerge from orders for coronaviruses living at home.
Overall, 8.16% of all mortgages were in patience on May 10, which means borrowers can skip or reduce payments, the trade group said. That was up from 7.91% on May 3, which was the smallest increase since March. Patience demand dropped from 0.52% of the total mortgage volume to 0.32%.
“There has been pronounced leveling in delayed loans – despite uniformly negative April economic data, unemployment is very high, and now past the May payment due date,” Mike Fratantoni, chief economist for the Mortgage Bankers Association, said in the report.
Potential exceptions to this trend are market segments for loans supported by Ginnie Mae, including Federal Housing Administration (FHA) and Veterans Affairs (VA) loans. More than 11% of Ginnie Mae’s loans are in patience due to a coronavirus outbreak. These loans tend to be given to borrowers who are first time homeowners with weaker credit – people who can be more exposed to the economic crisis caused by the pandemic.
While the pace of homeowner demand has slowed, the end of the mortgage industry’s problems is not necessarily visible. A recent report from the UK-based economic forecasting firm, Oxford Economics estimates that 15% of homeowners will miss their monthly mortgage payments.
The prospect of homeowners will likely depend on their ability to get back on their feet, especially for those who have lost their jobs. The good news for mortgage lenders is that job losses caused by coronavirus have largely been concentrated in the service sector, according to a report from First American Financial FAF, + 6.59%, a title insurance company. Because this job has lower skills and lower wages, it is less likely that new unemployed people have a home.
