Shelter Six:  Forbearance Figures Better Than Anticipated

May 18, 2020 by · Leave a Comment 

Federal Reserve Chairman Powell repeated last week that the Fed will do everything in its power to support low rates and support the economy as needed.

Amid speculation, Powell did make it clear that the Fed is not considering negative short-term rates at this time.

Mortgage purchase volume was up 11% last week over the previous week and has now increased for the 4th week in a row (and only 10% behind last year’s pace YTD).

The University of Michigan’s Index of Consumer Sentiment actually rose in May, beating expectations as attitudes about current conditions improve.

Mortgages in forbearance decreased for the 4th straight week and now represent 8.8% of all mortgages (4.7M borrowers), according to Black Knight as of May 12.

Many early projections pointed to forbearance figures that would surge to 15-25% of all mortgages, so the figures are much better than expected, thus far.

Rate Update

According to Mortgage News Daily, the benchmark Conforming 30-year fixed-rate fell on Friday to a new all-time low of 3.09%!  Expect the Fed to keep buying mortgage bonds, which should keep rates in the low 3’s.

This Week

Housing Starts will be released on Tuesday and Existing Home Sales on Thursday.  Mortgage markets will close early on Friday in observance of Memorial Day.