Forbearance dropping for a second week in a row | Mortgage Broker Largo
Didier Malagies • June 30, 2020
shares of Mortgage Forebearance dips for the second straight week
Share of Mortgages in Forbearance Dips for Second Straight Week
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Source: Inman
Written by: Jim Dalrymple Ii
In a world with precious little good news, here’s a small ray of sunshine: The number of mortgages in forbearance has dipped for the second straight week.
That’s according to a new report, out Monday, from the Mortgage Bankers Association (MBA). The report found that as of June 21, the total number of loans in forbearance dipped by 1 basis point, from 8.48 percent to 8.47 percent. In total, the MBA estimates that those numbers meant 4.2 million homeowners were in forbearance programs — down from 4.3 million earlier in June.
In a statement, MBA Chief Economist Mike Fratantoni added that the “overall share of loans in forbearance declined for the second week in a row.” Fratantoni also said that 17 percent of borrowers who went into forbearance have asked for an extension.
Overall, the report continues a running theme of modest-but-good news in the mortgage market. In the early days of the coronavirus pandemic, which shut down much of the economy, the number of loans in forbearance spiked.
However, since mid April, the numbers have been relatively flat. And while the recent dips have been modest, the lack of spikes at least suggests that things are not getting substantially worse.
For Fannie Mae and Freddie Mac loans, specifically, the news from the latest MBA report is even better, with the number in forbearance dropping for the third week in a row to 6.26 percent.
However, the number of Ginnie Mae loans in forbearance remained flat as of June 21.
The report is based on a sample of 54 mortgage servicers, and represents data on 38.2 million loans.
One caveat to the report is that it doesn’t reflect data from the most recent seven days — which in this case have been characterized by spikes in the number of coronavirus cases in some states. As a result, it remains to be seen what kind of impact those recent spikes will have on the mortgage market.
However, Fratantoni at least framed the numbers as a positive sign.
“The level of forbearance requests remains quite low as of mid-June,” he explained. “The rebound in the housing market is likely one of the factors that is providing confidence to both potential homebuyers and existing homeowners during these troubled times.”
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After years of identifying the housing market as unhealthy — culminating in a savagely unhealthy housing market in early 2022 — I can confidently assert that the housing market in 2024 and 2025 is on better footing. This transformation sets an extremely positive foundation for what’s to come. Some recent headlines about housing suggest that demand is crashing. However, that’s not the case, as the data below will show. Today on CNBC , I discussed this very point: what is happening now is not only in line with my price forecasts for 2024 and 2025, but it’s why I am so happy to see inventory grow and price growth data cool down. What we saw in late 2020, all of 2021 and early 2022 was not sustainable and we needed higher mortgage rates to cool things down — hence why I was team higher rates early in 2021. The last two years have ushered in a healthier market for the future of existing home sales. Existing home sales Before the existing home sales report was released Thursday, I confidently predicted a month-to-month decline, while estimating the existing home sales print to be just a tad above 4 million. That’s precisely what occurred — no surprises there, as every month in 2025 has consistently exceeded 4 million. However, it’s important to note that our weekly pending home sales data has only recently begun to show growth compared to last year. We have an advantage over the data from the National Association of Realtors since our weekly pending home sales data is updated weekly, making their report somewhat outdated. The notable surprise for me in 2025 is the year-over-year growth we observe in the data, despite elevated mortgage rates. If mortgage rates were ranging between 6%-6.64%, I wouldn’t have been surprised at all because we are working from the lowest bar in sales ever. Purchase application data If someone had said the purchase application data would show positive trends both year to date and year over year by late April, even with mortgage rates not falling significantly below 6.64%, I would have found that hard to believe. Yet, here we are witnessing consistent year-over-year growth . Even with the recent rate spike, which has clearly cooled demand week to week, we are still positive. If mortgage rates can just trend down toward 6% with duration, sales are growing. Housing inventory and price growth While my forecast for national price growth in 2024 at 2.33% was too low and in 2025 at 1.77% may be too low again, it’s encouraging to see a slowdown in price growth, which I believe is a positive sign for the future. The increase in inventory is also promising and supports long-term stability in the housing market. We can anticipate that millions of people will continue to buy homes each year, and projections suggest that we’re on track for another nearly 5 million total home sales in 2025. As wages rise and households are formed, such as through marriage and bringing in dual incomes, this influx of inventory returning to normal levels provides an optimistic outlook. This trend in inventory data is truly heartening. Conclusion With all the data lines I added above, you can see why I have a renewed optimism about the housing market. If price growth significantly outpaced inflation and wages, and inventory wasn’t increasing, I’d be discussing a much different and more concerning state of affairs. Thankfully, that’s not the case. Historically, we’ve observed that when home sales dip due to higher rates, they may remain subdued for a while but ultimately rise again. This is common during recessions, as I discussed in this recent HousingWire Daily podcast . As you can see in the existing home sales data below, we had an epic crash in sales in 2022 but found a base to work from around 4 million. This trend has shaped the landscape of housing economics since post-WWII, reminding us that resilience and recovery are always within reach. 
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When you're buying a home, it's not just about affording the purchase price or down payment. You’ve got closing costs, moving expenses, and all the “surprise” things that come up after you move in — like needing a new appliance, fixing a plumbing issue, or just furnishing the place. Keeping some cash reserves is smart. A good rule of thumb is to have at least 3-6 months of living expenses saved after the purchase, just in case life throws a curveball. Are you thinking about buying soon or just planning ahead? tune in and learn https://www.ddamortgage.com/blog didier malagies nmls#212566 dda mortgage nmls#324329
