The rate of forbearances (delaying the repayment of mortgage loans) are dropping, according to recent data released by Black Knight and Housing Wire.
HousingWire’s Kathleen Howley cites Black Knight in reporting a drop of 22% from May’s peak of 4.7 million.
“Measured as a share of all mortgages, 7% of home loans are in forbearance, down from 7.1% in the prior week,” says Howley.
She goes on to report that the rate for home loans in Ginnie Mae securities, primarily mortgages backed by the Federal Housing Administration (FHA) or the Veterans Administration (VA) also dropped, along with the forbearance share for mortgages held in bank portfolios or in private-label bonds.
Howley quotes FTN Financial’s Walt Schmidt, saying, “We’re seeing a bifurcation in the numbers, with GSE forbearances lower than the rates for the Ginnie space and the private-label space.”
There is a correlation between the drop in the overall number of mortgages in forbearances and job market gains, with the unemployment rate in August dropping to 8.4%.
Howley adds that while the economy has added 10.6 million jobs since April, it’s not even halfway toward replacing the 22.2 million jobs lost between February and March, according to government data.
“Most economists are predicting the soft jobs market will persist into 2021. Fannie Mae Chief Economist Doug Duncan forecasts the unemployment rate will average 8.8% in 2020 and 7.1% next year,” she says.