5 Indicators the Housing Market is Rebuilding After Pandemic

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The most talked-about topic This Week in Real Estate was forbearance and whether someone qualifies for the benefit of deferred mortgage payments. Below are a few newsworthy events from the first full week of April that influence our business: 

Average Mortgage Rate Unchanged at 3.33%, Freddie Mac Says. The average U.S. rate for a 30-year fixed mortgage was 3.33% this week, matching the prior week, according to Freddie Mac. The rate remains 4 basis points away from the all-time low of 3.29% set in the first week of March. Based on the 10-year Treasury yield, a benchmark for home-loan rates, financing costs could be headed lower, said Sam Khater, Freddie Mac chief economist. “There is room for rates to move down,” Khater said. “This year the 10-year Treasury market has declined by over a full percentage point, yet mortgage rates have only declined by one-third of a point. As financial markets continue to heal, we expect mortgage rates will drift lower in the second half of 2020.” The securities market, including Treasuries, is being supported by the Federal Reserve’s bond-buying program resurrected to bolster the availability of credit – just as it did during the financial crisis more than a decade ago. The Fed revived its so-called quantitative easing, or QE, program on March 15 to prevent the type of credit crunch that devastated the mortgage industry more than a decade ago. Last week, the average U.S. fixed-rate dropped 17 basis points, a sign the Fed’s plan is working. “That drop reflects improvements in market liquidity and sentiment,” Khater said last week.

5 Indicators That Will Show When The Housing Market is Rebounding From COVID-19. These are dark times. But even in dark times, we are preternaturally prepared to see the end of the tunnel. With that, here is a guide to the five indicators that the period of AD (After Disease) is abating, and the era of AB (America is Back) is emerging. The first, and in fact, a prerequisite event that will indicate that the economy will come out of this tunnel is the turning of the number of new cases of infection from positive to flat or negative. The second and also prerequisite indicator that the economy will be getting back on track is the lifting of stay-at-home orders. An early indicator of recovery would see the 10-year yield above 1% – especially if it got above 1.33%. A range between 1.33% and 1.6% on the 10-year yield is something we should be rooting for. When credit stress and jobless claims start to fall, you can believe we are on the road to recovery. Some of the hardest-hit business sectors will show recovery first because the declines have been so horrific. The restaurant industry, airlines, hotels, movie tickets, rideshares, and gasoline purchases are some areas to watch. As more people walk the earth, go to work and get back to normal, these beaten-down industries will be some of the first to pick up.

Are You a Homeowner Seeking Forbearance on Your Mortgage? Watch Out For These Red Flags. The CARES Act stimulus package requires servicers to provide forbearance – a temporary postponement of payments – to any homeowner with a federally-backed mortgage. Americans with other mortgages may also be able to receive forbearance at their servicers’ discretion. for forbearance have poured in. Forbearance requests grew by 1,896% between March 16 and March 30, according to a recent report from the Mortgage Bankers Association, a trade group that represents the mortgage industry. For those who have yet to get a forbearance agreement in place, here’s what you need to know: “Forbearance is not forgiveness,” said Karan Kaul, a research associate at the Urban Institute, a left-of-center nonprofit policy group. “You still owe the money that you were paying, it’s just that there’s a temporary pause on making your monthly payments.” Under a forbearance agreement, a borrower can pause payments entirely or make reduced payments on their mortgage. Homeowners with federally-backed mortgages are eligible for up to 180 days of forbearance initially under the CARES Act. At that point, if they’re still facing financial difficulty, they can request an extension of up to another 180 days of forbearance. The provisions in the stimulus package stipulate that during the forbearance period, mortgage servicers cannot make negative reports about the borrower in question to credit bureaus. Borrowers also will not owe any late fees or penalties if they are granted forbearance.

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