4.68 Million Homeowners In Forbearance Plans (8.8% of Active Mortgages)

Black Knight has some grim housing news today. The latest data from the McDash Flash Forbearance Tracker shows that the number of homeowners in active forbearance rose this week after three consecutive weeks of declines.

As of June 23, As of June 23, 4.68 million homeowners are in forbearance plans, representing 8.8% of all active mortgages, up from 8.7% last week. Together, they represent just over $1 trillion in unpaid principal ($1,025B)., up from 8.7% last week. Together, they represent just over $1 trillion in unpaid principal ($1,025B).

Fannie Mae and Freddie Mac lead in terms of loans in forbearance.

What is forbearance you ask? Forbearance is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying your mortgage. You will have to pay the payment reduction or the paused payments back later.

US New Home Sales Surge 16.6% For May Thanks To Historic Low Interest Rates (Will The Fed Wave Into Negative Interest Rates?)

New home sales rose 16.6% MoM in May, a pleasant surprise for the US economy. This is nearly the exact opposite of yesterday’s existing home sales plunge of nearly 10% MoM in May.

(Bloomberg) – Prashant Gopal – New home sales in the U.S. rose more than expected in May, with record-low mortgage rates pulling buyers back into a housing market that froze up during the pandemic.

Purchases of single-family houses climbed 16.6% to a 676,000 annualized pace, government data showed Tuesday. The median forecast based on a Bloomberg Survey of economists was for 640,000.

Homebuilders are welcoming buyers back after social-distancing rules across much of the U.S. kept them on the sidelines in March and April. A growing share of buyers are opting for new homes because existing home listings are in short supply. Record-low interest rates have made the properties affordable to a larger share of buyers.

With the Taylor Rule at -11%, will The Fed venture into negative nominal rates?

U.S. May Existing-Home Sales Fell 9.7% to 3.91m Rate – Lowest Since 2010 (Inventory Low, Median Prices High)

The Covid-19 epidemic is taking its toll on existing home sales. US existing home sales declined 9.7% in May to the lowest level since October 2010.

Inventory of existing home sales remain low despite historic low interest rates while the median price of existing home sales continues to soar.

During the housing bubble, both inventories and home prices rose together. But the reverse has happened since 2012.

Even The Federal Reserve can’t fight a virus. Although The Fed can create asset bubbles.

There is no escaping The Federal Reserve and their bubble-making powers!

Face The Fire! Q2 GDPNow Declines To -52.8% On Dismal Construction Report, Yield Curve Steepens and Dow Rises 92 Points

Today’s construction report was not good. Construction in the US fell by 2.9% in April with residential declining 4.5% MoM.

Leading the Atlanta Fed’s GDPNow forecast for Q2 to fall further to -52.8%.

But in spite of the COVID lockdowns and nationwide protests, the US Treasury Yield Curve steepened with long rates rising.

And the Dow rose almost 100 points.

Face the fire!

US Existing Home Sales Plunge 17.8% In April, Worst Since 2010 (Lower-end Housing Hit The Worst)

According to the National Association of Realtors (NAR), US existing home sales in April plunged 17.8% from March, the largest drop since 2010.

Existing homes sales MoM is the white line, the Mortgage Bankers Association 30-year rate is the blue line.

Given how unemployment is differentially hurting lower-wage workers, it is not surprising that existing home sales in the $0-$100,000 range fell 33% in April.

While $500k-$750k home sales fell by “only” 12.2%.

Existing home sales inventory remains low while median home price of existing home sales rose 2% from March to April.

Alarm! US Personal Spending Tanks -7.5% MoM In March (Durable Spending Tanks 15.1% MoM)

Alarm! 

US personal spending tanked -7.5% MoM, exceeded only by durable goods spending that tanked -15.1% MoM in March.

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Personal income dropped by “only” -2% MoM.

An additional 3.8 million filed for jobless claims.

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Pending home sales tanked -14.5% YoY for March.

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Alarm!

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Oyster Stew! WTI Crude Spot Rises 21%, US Jobless Claims Up 4.43 Million (But Slowing), New Home Sales Decline -15.4% MoM In March

I feel like we are in the Three Stooges film “Oyster Stew.” Every time we look for good news, more bad news come out.

But here is some good news.

WTI Crude oil is up 21.26% this morning .. to $16.71 a barrel (still low).

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And while US jobless claims rose 4.43 million the past week, the US is several weeks past the peak. (Knock on wood).

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But back to crude. Saudi oil is still negative for heavy and medium crudes to the USA.

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Now for the oyster eating the cracker.

US new home sales fell -15.4% MoM in March.

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As I said, oyster stew.

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2.9+ Million Homeowners In Forbearance Plans

According to Black Knight, as of April 16, more than 2.9 million homeowners are in forbearance plans, representing 5.5% of all active mortgages.

Together, they account for $651 billion in unpaid principal and includes 4.9% of all GSE-backed loans and 7.6% of all FHA/VA loans.

Remember: regardless of a borrower’s forbearance status, servicers of loans in government-backed securities must make advance principal and interest (P&I) payments each month for these loans.

At today’s level, mortgage servicers would need to advance $2.3 billion/month to holders of government-backed mortgage securities on COVID-19-related forbearances. Another $1.1 billion in lost funds will be faced each month by those with portfolio-held or privately securitized mortgages (nearly 5% of these loans are in forbearance as well).

While Ginnie Mae has announced a pass-through assistance program through which it will advance principal and interest payments to investors on behalf of servicers, at present there is no such program in place for mortgages backed by the GSEs.

Not surprisingly, Fannie and Freddie have the largest amount of loans if forbearance (4.9%). But the FHA & VA have 7.6% of loans in forbearance.

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And according to Redfin, pending homes sales YoY are down almost 50%.

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PLEASE let the economy open up soon!!!

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MBA Mortgage Purchase Applications Decline 35% YoY

Mortgage applications increased 7.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending April 10, 2020.

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The Refinance Index increased 10 percent from the previous week and was 192 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 2 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 35 percent lower than the same week one year ago.

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On the bright side, most of the decline in purchase application occurred before last week.

So, it appears that no more snake juice is required.

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Courtesy of the great Jesse from Jesse’s Cafe Americain!

Mortgage Apps Crash Most Since 2009 (Covid-19 Lockdown Edition)

(Bloomberg) — U.S. loan applications for buying and refinancing homes plunged last week by the most since the global financial crisis, amid coronavirus shutdowns and related financial turmoil that pushed borrowing costs higher.

The Mortgage Bankers Association’s index of applications fell 29.4% in the week ended March 20, the biggest decline since early 2009. Home-purchase applications dropped by 14.6% while refinancing applications plummeted 33.8%.

The average contract rate on a 30-year fixed mortgage increased 8 basis points to a two-month high of 3.82%, despite the Federal Reserve cutting the benchmark interest rate to near zero.

The decline in applications is an early sign suggesting home sales will slow and that refinancings are coming off a spike. That follows other data indicating a precipitous dropoff in business activity this month as stores and schools shutter to prevent the spread of the virus.

Yes, MBA mortgage applications fell the most since 2009 and the financial crisis.

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Mortgage rates actually rose last week (yellow line) but will likely decline this week.

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The biggest decline came in mortgage refinancing applications, down 33% WoW.

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Mortgage purchase applications dropped 14.64% WoW.

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