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The number loans in forbearance jumped to 7.54 percent as of April 26, that’s an increase from 6.9 percent the week prior, according to a survey from the Mortgage Bankers Association. About 3.8 million homes are estimated to now have forbearance plans.
That reported increase comes after another week of mounting unemployment claims. After five-weeks, more than 30 million people have filed for unemployment since the start of the lockdowns, quarantines and self-isolation began.
“With millions more Americans filing for unemployment over the week, the level of job market distress continues to worsen," Mike Fratantoni, MBA’s chief economist, said in a statement. "That is why we expect that the share of loans in forbearance will continue to grow, particularly as new mortgage payments come due in May.”
Recently, the U.S. government took action to ease the liquidity concerns of creditors by establishing a four-month advance obligation limit on interest and principal payments for loans in forbearance.
The good news in the data is that the number of requests to enter into forbearance agreements, which would temporarily put mortgage payments on hold, grew at a slower pace when compared with prior weeks.
“As states across the country begin to re-open their economies, a silver lining we are seeing is indications of increased activity in the housing market, including more purchase applications in some markets,” Frattoni said. “We are hopeful that the housing market can eventually contribute to a broader rebound in economic activity, which would then begin to reverse the unprecedented job losses experienced during this crisis.”
During the week ending April 24, mortgage purchase applications rose to their strongest level in a month as mortgage rates remain historically low.
Peggy Zabakolas, a licensed real estate broker with Nest Seekers International and a former regular on "Million Dollar Listing," said current market conditions favor homebuyers.
"With massive layoffs, we may see a lot of housing inventory coming to market in the next few months at more accurate pricing,” Zabakolas said in a statement. “If you have the cash on hand and a flexible timeline on closing, all the stars may be aligned for you to make a purchase. If you have the required down payment and solid job security, there’s no reason you shouldn’t take advantage of low mortgage rates.”
Experts are optimistic overall, and have told FOX Business the housing market could rebound rather quickly when the U.S. economy begins to reopen.