For the first time in 20 years: coronavirus caused a sharp jump in delinquencies in mortgages
While the impact of the coronavirus pandemic on the US housing market is still being assessed using incoming data, a new report shows that an incredibly large number of homeowners cannot make their mortgage payments. Writes about it Fox Business.
According to a recently published report by Black Knight, a real estate data analytics company, in March mortgage arrears grew by more than 3,3%. This is the first sharp increase in March this century, which is traditionally considered the financially prosperous month in the United States. Mortgage payment is considered overdue if the payment is delayed for 30 days or more.
As a rule, March is a financially strong month, because people get a tax refund, so it’s easier for borrowers to pay bills.
These figures not only sharply contrast with mortgage market trends usually observed in March, but also differ from data recorded earlier in 2020, which shows how the outbreak of coronavirus affected the housing market in the United States (quarantine entered into force only in mid-March )
Prior to the introduction of self-isolation orders and the resulting massive wave of layoffs, the housing market was in a very favorable position. Eviction rates for non-payment and 90-day delinquencies in payments reached record lows. Mortgage prepayments jumped 40% thanks to historically low rates.
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At the same time, the number of homeowners entering into deferred payment agreements is increasing. As of April 16, more than 2,9 million homeowners have entered into such agreements, which is 5,5% of all mortgage loans, which is about $ 651 billion in unpaid principal amount.
A payment deferment is when the lender allows the mortgage holder to pause or temporarily reduce payments with the expectation that everything will be paid off in full over time.
The legislator’s several-million dollar stimulus package called for lenders to allow people to suspend payments if they experience financial difficulties due to coronavirus.
As ForumDaily wrote earlier:
- Coronavirus quit quarantined grow rapidly to historic highs. In just five weeks, more than 26 million people have applied for unemployment benefits. This is much more than an increase in jobs over the past 10 years after the Great Recession.
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