The novel coronavirus pandemic prompted an unprecedented interest in mortgage deferral and refinance, Google search metrics show.
In March, U.S. Google searches for “mortgage relief” and “mortgage refinance” spiked, reaching its highest rate since Google started tracking search data in 2004, according to a new NerdWallet study.
“Given low interest rates and high refinance numbers, it was not surprising to see that people were looking for relief or refinancing. But it was more interesting how dramatically it had increased,” said Nerdwallet data analyst Elizabeth Renter, who conducted the study.
Unemployment jobless claims hit a new high, reaching 6.6 million for the week ending April 4, according to numbers released Thursday morning.
As a record number of renters missed April rent payments, homeowners are also wondering how they will pay their monthly mortgage. Searches for “mortgage relief” peaked on March 20, tripling the rate of searches compared to the term’s previous peak in 2009, during the Great Recession.
“A growing number of people are in a dire financial situation, and they want to know what options are out there, either immediately or preparing for if things get worse,” said Renter. “People will look at monthly spending to see where they can cut back. Housing is a big chunk, so forbearance [delaying payments] could relieve a ton of financial pressure.”
Many homeowners with federally-backed mortgages have been able to secure mortgage relief through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, though many have questions and are dealing with delays as lenders struggle to manage the volume of forbearance requests.
As of April 6, searches for “mortgage relief” have dropped 76% from the peak in March. Searches significantly dropped after the first of the month, when most mortgage payments are due, so it is possible searches for “mortgage relief” could climb again in the coming weeks, said Renter.
Refinance searches began rising in February, as mortgage rates dropped. As the pandemic began to squeeze households’ finances, searches for “mortgage refinance” rose, peaking on March 16. The phrase previously peaked in December 2008, at only 66% of the rate seen in March.
Since March, the number of “mortgage refinance” searches has dipped 83% from March’s peak, in part due to rising interest rates, which de-incentivizes refinancing. Mortgage interest rates began to rise again in March as lenders struggled to manage the influx of applications.
Homeowners are expected to shift interest away from refinance in favor of payment deferral as job loss prompts immediate cash flow interruptions.
“As more people lose their jobs, refinancing may make less sense. It is no longer a question of saving money over the life of a loan, but how do I pay my bills this month? So searches may swing in the coming month from refinancing more towards mortgage relief,” said Renter.
Sarah Paynter is a reporter at Yahoo Finance. Follow her on Twitter @sarahapaynter
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