Soft Landing from Pandemic Could Mean Less Inventory, Higher Prices

Black Knight's Mortgage Monitor for the month of October looks at current delinquency statistics and their potential downstream effects on inventory and other housing concerns. The report seems to confirm that homeowners, even those who sought forbearance protection during the COVID-19 pandemic, seem to be performing well on their mortgage loans. The national mortgage delinquency rate was at 3.74 percent in October, down from a pandemic peak of over 8 percent in April 2020. While there are still almost 700,000 more serious delinquencies, borrowers more than 90 days past due, than before the onset of the pandemic, those numbers fell by 127,000 or 10 percent during October as the first wave of forborne homeowners reached the end of eligibility and returned to making payments. Black Knight says further improvement is expected in coming weeks as borrowers work through loss mitigation options as they exit the program.

Lower Rates Stoked Refinancing During Post Holiday Week

The combination of lower rates and a post-holiday business week made mortgage application activity during the week ended December 3 more than a little uneven. The Mortgage Bankers Association (MBA) said its Market Composite Index, a measure of mortgage loan application volume, rose 2.0 percent on a seasonally adjusted basis from the week ended November 26, continuing the metronomic week-to-week swings that have been in place since early October. On an unadjusted basis, the Index increased 45 percent compared with Thanksgiving week. The Refinance Index increased 9 percent from the previous week and was 37 percent lower than the same week one year ago. The refinance share of mortgage activity increased to 63.9 percent of total applications, the highest share since October 8, from 59.4 percent the previous week.

Consumers Gloomiest in a Decade, But Still A Great Time to Sell

The chief finding from Fannie Mae's November National Housing Survey (NHS) was an increase in consumer pessimism. The company says respondents to the right track/wrong track question expressed the most downbeat attitude in 10 years. Seventy percent of those expressing an opinion about the direction of the economy said it was on the wrong track, a 5 point month-over-month increase. Only 22 percent chose the opposite answer.

The right/wrong track question is not among the six that are used to construct Fannie Mae's Home Purchase Sentiment Index (HPSI), but four of the six components that are decreased during the month. This brought the index down 0.8 points from October to 74.7, marking a 5.3-point year-over-year decline.