E — Economics

U.S. Mortgage Forbearance Rate Declined To The Lowest Since April 2020: MBA Survey

12 January, 2021




 

According to the Mortgage Bankers Association, the U.S. forbearance rate measuring the share of mortgage loans with suspended payments declined to 5.46 percent as of January 3, 2021 (down from 5.53 percent prior). It was the lowest since April 2020.

 

 

The report also highlighted:

“The share of loans in forbearance slightly declined for each investor category entering the new year, remaining within the narrow range observed for the last two months,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “The data show that those homeowners who remain in forbearance are more likely to be in distress, with fewer continuing to make any payments and fewer exiting forbearance each month. Those borrowers who do exit are also more likely to require a modification to their ongoing repayment plans.”

 

The ongoing drop in each investor category suggests that the housing market is normalizing. However, this positive trend is likely to reverse soon in a context where the labour market has been under heavy pressure since December amid Covid-19 resurgence. As a reminder, the U.S. labor market lost jobs in December for the first time in eight months.