EDITOR NOTE: The good news is that 30-day and 60-day mortgage delinquencies have been falling steadily since the lifting of the COVID lockdown. This pattern bears similarity to what you’d expect during a natural disaster--delinquencies spiking and then fading to pre-disaster levels. The bad news is that 90-day delinquencies have been rising. Currently, there’s a second coronavirus surge taking place in Europe. Should this be an indication of what to expect in the US, a second lockdown would invariably exacerbate the current delinquency figures, threatening our economy’s prospects for recovery that, even at the current rate, is likely to remain unbearably slow.
Just when we thought the US mortgage market had recovered from the financial crisis, then along came Covid and The Federal Reserve helping to push mortgage rates to near all-time lows.
According to Black Knight, the share of borrowers with only one missed payment was already below pre-pandemic levels in July and in August that number fell again. The number of loans in the 30- to 60-days past due bucket dropped by other 9.0 percent. At the same time, serious delinquencies, loans 90 or more days past due, increased by 5 percent and have risen in each of the past five months.
The transition from 30 days delinquent to 60 days late was falling as expected but showed a disturbing uptick in August.
Compared to natural disasters such as hurricanes, this time it is different PRIMARILY BECAUSE OF GOVERNMENT ECONOMIC SHUTDOWNS.
Most mortgages in forbearance remain in active forebearence and had the term extended DUE TO GOVERNMENT LOCKDOWNS OF SEVERAL KEY ECONOMIES.
But with US GDP growth expected to recover at a rate of 34.602%, look for forbearances and 30 day delinquencies to fade.
Unless Speaker Nancy Pelosi’s nephew California Governor Gavin Newsome insists on keeping California on eternal lockdown in order to prevent the spread of Covid.
Originally posted on Confounded Interest