Welcome to iLeads Mortgage Market Minute, where we bring you the latest, most relevant news regarding the mortgage market. Let’s get started!
Mortgage “Relief” and “Refinance” Searches Spike During Outbreak*
If you can gauge how people are feeling by their internet searches, American homeowner sentiment during the first months of the U.S. coronavirus crisis may be split: Some are eager to save money on their mortgages, and others are afraid of falling behind on their payments.
In late February, as mortgage rates began sinking to lows not seen since the spring of 2016, Google searches for “mortgage refinance” began climbing significantly week after week, peaking in mid-March at their highest point in at least 15 years.
A few weeks after “mortgage refinance” searches started mounting, as waves of closures and layoffs rippled across the country, Americans took to the internet looking for “mortgage relief” in numbers not previously seen. Both search terms peaked between March 15 and 28, according to Google Trends data. Read more in-depth here.
Freddie Cautiously Optimistic as Housing Market Shows Resilience*
Freddie Mac’s Quarterly Forecast is more upbeat than one might expect. While it acknowledges that, with big chunks of the U.S. economy currently in lockdown the housing market faces “its greatest challenge in over a decade,” it seems to assume its duration could perhaps be limited, with the recovery starting in the third quarter of the year.
It does hedge this, admitting that the contours of the pandemic and thus the recovery from it seem to vary from country to country so forecasting is even more uncertain than usual. Even if the recovery does take off, with most of the damage contained in the first half of this year, it will probably take another year for things to return to normal. Read more in-depth here.
Housing isn’t as doomed as it may seem – Here’s why*
But it’s going to get worse before it gets better
The housing reports for March that will be public in April hang in purgatory as strange hybrids of data from before the coronavirus and after the disease shut down the U.S. economy. For this reason, the next existing home sales report from March will not tell you the current story for housing.
When the coronavirus attacked the U.S. economy, we had been enjoying the longest job and economic expansion ever recorded in history. Purchase application data had been on an upswing of double-digit growth year over year until March 18.
Even the most recent pending home sales data (seen below) looked good, which historically has an excellent correlation to the future of existing-home sales. Read more in-depth here.
CEO of mortgage giant Quicken Loans explains how struggling homeowners can ‘skip the payment’*
One of the biggest questions for homeowners facing a coronavirus-related financial hardship is whether to try to pause their mortgage payments.
Quicken Loans CEO Jay Farner told CNBC on Wednesday the company wants to educate people that if they “skip the payment,” they’ll still have to pay it eventually.
“Our tool right now is something called ‘forbearance,’” Farner said on “Squawk Box.” “It gives you the opportunity to pause on making your mortgage payments [with] no impact on your credit. But at some time in the future, you have to catch those back up.” Read more in-depth here.
Refinancing fuels uptick in mortgage applications*
The refinance share of mortgage activity accounted for 76.2% of total applications
Mortgage application activity bounced back for the week ending April 10, primarily fueled by refinancing, according to data released by the Mortgage Bankers Association.
The Market Composite Index, a measure of mortgage loan application volume, rose by 7.3% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased by an even 7% compared with the previous week.
The seasonally adjusted Purchase Index dropped by 2% from the previous week, while the unadjusted Purchase Index dipped by 1% over the same period – and the latter was also 35% lower than the same week one year ago. This marked the fifth consecutive week that purchase activity was in decline.
The upward motion in the new data came via the Refinance Index, which sailed 10% higher from the previous week and was 192% higher than the same week one year ago. The refinance share of mortgage activity increased to 76.2% of total applications from 74.2% the previous week. Read more in-depth here.
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