As lenders provide relief for homeowners from the financial challenges of COVID-19, the number of mortgages on temporary postponement increased to 8.16 percent as of May 10, up from 7.91 percent in the prior week, according to the Mortgage Bankers Association’s (MBA) Forbearance and Call Volume Survey.
The MBA estimates 4.1 million homeowners are in forbearance.
At 11.26 percent, mortgages backed by Ginnie Mae had the largest overall share of loans in forbearance by investor type. The number of loans in forbearance for depository servicers rose to 9 percent, while the number of loans on hold for independent mortgage bank servicers swelled to 7.85 percent.
“The pace of forbearance requests continued to slow in the second week of May, but the share of loans in forbearance increased,” said Michael Fratantoni, MBA’s chief economist, in a statement.
MBA’s latest survey covers the period from May 4 through May 10 and represents nearly 77 percent or 38 million loans in the first mortgage servicing market.
Despite April’s troubling economic data and high, Fratantoni said the number of loans put into forbearance has flattened. But Federal Housing Administration and Veterans Affairs borrowers are more likely to be employed in the sectors hardest hit in this crisis, which is why more than 11 percent of Ginnie Mae loans are in forbearance, he said.
Record low mortgage rates are sustaining the refinance wave, helping homeowners lower their mortgage payments and save money during these challenging times, he said.
As of May 14, the average 30-year fixed rate mortgage was 3.28 percent, while the 15-year fixed was 2.72 percent, according to Freddie Mac.
Furthermore, the consecutive increase in purchase applications in the last four weeks is a sign that housing demand is strengthening as more states ease restrictions on activity and people get back to work, Fratantoni added.
“We will continue to closely monitor the forbearance request and call volume data for any sign of an uptick, but current trends suggest that if the economy continues to gradually reopen, the situation could be stabilizing,” he said.