Mortgage industry data is beginning to portray a clearer and more optimistic picture as new data emerges, following the gradual reopening of the economy.
Though the mortgage industry consensus forecast is a Q2 overall slowdown, several strong signals portend a refinance acceleration in Q2 and a consistently high rate of applications throughout 2020. Purchase mortgage loans are also showing significant signs of renewed life and that trend should accelerate into next quarter if COVID-19 infection rates continue to decline across the country and buyers and sellers regain the desire to sell and tour homes.
As for the risks of foreclosures due to the dramatic spike in unemployment, they appear to be mitigated by aggressive government and lender relief programs. Meanwhile, many of the unemployed are furloughed, and many others are likely to return to work within the next few weeks or months.
Consider these leading indicators of reasons to hire aggressively for what we believe will be a vigorous and robust mortgage industry, poised to last through 2020:
- As of late March, the Fed has also taken aggressive action to stem the economic impact of COVID-19, including slashing interest rates. The average contract interest rate for a 30-year fixed rate mortgage decreased to a record 3.40% from 3.43%.
- The Fed has employed quantitative easing to ensure mortgage rates remain low and has written a blank check, promising to buy billions in agency mortgage-backed securities from Ginnie Mae, Fannie Mae and Freddie Mac.
- Mortgage applications to purchase a home rose for the third straight week, up 7% from a week earlier. Purchase volume was still 19% lower annually, but that annual loss is shrinking by the week. Just three weeks ago, purchase volume was down 35% annually. Demand last week was led by strong growth in Arizona, Texas and California.
- As of April 2, Bankrate reports that the refinance share of mortgage applications has “shot up by 26 percent, reflecting the eagerness of homeowners to lock in low rates.”
- With job losses mounting, many homeowners will be looking to tap equity that has risen steadily since 2011, once they are re-employed or come off of furloughs.
- While the April refinance surge led to a bump in rates due to lack of capacity, rates should drift down again as companies add staff to handle the influx of applications.
- If rates fall to 3%, some 19.4 million homeowners will be refi eligible, according to mortgage data analysis by Black Knight.
- As of the last week in April, refinance applications decreased 2% for the week but were 210% higher than a year ago. Many lenders were offering higher rates for refinances than for purchase loans, while others were suspending the availability of cash-out refinances because of their inability to sell them to Fannie Mae and Freddie Mac.
- Black Knight, Inc., a data and analytics firm that services the mortgage and real estate industries, said as of May 11 that the latest data shows the number of American mortgage holders seeking relief — also known as mortgage forbearance — had climbed to 3.8 million, accounting for more than 7% of all active mortgages.
- Almost four million mortgage borrowers have had their payments paused or reduced as the novel coronavirus outbreak continues to strain household balance sheets, a survey from the Mortgage Bankers Association showed on May 11.
- Under the CARES Act passed by Congress on March 27, homeowners with government-backed mortgages can seek up to 6 months of relief. A 60-day moratorium on foreclosure actions is also in effect through mid-May. Homeowners can also request up to 180 days of forbearance. After six months, they can request up to another 180 days with no additional fees, penalties, or additional interest.
- For homeowners whose mortgages are not backed by the federal government, there are also relief options available from their private lenders.
- Home buying is currently slow because sellers are currently afraid to have strangers walking around in their homes, but this will likely change as summer is typically strong, mortgage rates are at record lows, and infection rates are slowing in DFW.
Mortgage companies that provide expertise and assurance to their customers will be positioned to take advantage of these market conditions. Imprimis Group follows a disciplined process to identify candidates who consistently deliver exceptional service and results. Our staffing specializations include direct hire, temporary-to-hire, temporary, contract, and project teams.
While the nation is in an economic crisis, we are offering competitive wage pricing that is likely to scale up as the above market factors kick in. Some of DFW’s best industry talent is now available, so take advantage of this market opportunity by calling Imprimis Group at (972) 419-1700.