Mortgage Forbearance Requests Tapering Off

The COVID-19 (coronavirus) pandemic has fueled the rise in mortgage forbearance requests. This is because the CARES Act provided the ability for mortgage owners to take advantage of up to a year of mortgage forbearance, as long as the mortgage is backed federally.

According to mortgage data and technology firm Black Knight, the coronavirus led to approximately 4.14 million loans being put into forbearance — that’s equivalent to 7.8% of all active mortgages. However, these requests have actually been on the decline in recent weeks.

So, what might this mean for the housing market?

Because of the nature of these forbearance requests, it may be more difficult for homeowners who have mortgages in forbearance to get another loan immediately after the coronavirus pandemic has ended — potentially even up to a year after the forbearance period. This means their ability to refinance or purchase a new home may be delayed, even after the economy is in recovery.

Although mortgage forbearance requests are on the decline and that sparks a bit of hope in the future of the housing market, it is important to remember that the coronavirus has continued to impact the United Stated on a large scale, and some states have been hit much harder than others in regard to recent spikes and lockdown procedures.

In all, it may be too early to predict just how much of an impact this will have on the housing market. While recovery seems to be underway, the future is uncertain in terms of unemployment benefits and the longevity of the pandemic — both of which pose a risk to the mortgage market.

If you have any questions regarding home loan rates or products, give me a call. I’m always happy to help.

Source: MortgageOrb, CNBC