2020 was supposed to be the year of low, stable mortgage rates, increasing new home construction and the tail end of the refinance boom. Oh, how quickly things change.
America’s efforts to slow the spread of the coronavirus outbreak have brought the U.S. economy to a screeching halt, throwing millions of people out of work, pausing construction projects and stalling a booming real estate market.
How coronavirus is impacting the housing market
Here’s how the nation’s response to the COVID-19 pandemic has turned 2020 housing market predictions on their heads.
Foreclosures delayed. With new unemployment claims spiking, the federal, state and local governments have taken steps to prevent foreclosures on people who now have trouble paying their mortgages. Many states and cities have halted foreclosure and eviction proceedings in their jurisdictions. Government-sponsored enterprises Fannie Mae and Freddie Mac, which buy up mortgages made by private lenders, have paused foreclosure proceedings on all loans they hold until at least mid-May.
Home sales drop, but prices remain stable. With government mandates keeping people at home, realtors across the country report that significantly fewer people are interested in buying homes. Fully 90% of realtors surveyed by the National Association of Realtors in early April said buyer interest had waned, with nearly half saying it had decreased by at least half.
Hard data from the National Association of Realtors lags by several months, meaning it does not yet reflect the impact of coronavirus. Almost certainly it will show a decline in home sales, the association predicts. However, the realtors group is still hopeful that the market will rebound once stay-at-home orders are lifted. In the meantime, home prices appear to be remaining stable, aided by the fact that inventory is low because fewer homes are going on the market in the midst of the pandemic.
Refinances boom. The Federal Reserve has cut mortgage interest rates to near record lows, making it a prime time for millions of homeowners to consider refinancing. By mid-March, refinance activity was at its highest level in more than a decade, according to the Mortgage Bankers Association. The organization doubled its prediction for refinance volume for the entire year, to $1.2 trillion. That’s the highest since 2012.
Construction slows. Though many states have deemed the construction industry “essential,” allowing them to keep operating, that hasn’t kept the construction business from a significant downturn in activity. The Associated General Contractors of America found that 40% of construction firms had laid off workers and more than half had seen projects halted. This has hit the homebuilding industry hard. Virtually all homebuilders are reporting that buyer interest has decreased, according to the National Association of Home Builders. The Minneapolis Fed has found delays in new home builds in its territory, as well.
What to do if you need help with your mortgage
If you are having trouble making your mortgage payment due to the impact of coronavirus, help is available. Here are a few things to consider.
Request mortgage relief. A large percentage of the nation’s mortgage borrowers are eligible for some type of relief. The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, has directed servicers of federally backed loans to offer six months of mortgage forbearance. This allows you to delay payments, with the balance added to what you owe.
The federal CARES (Coronavirus Aid, Relief and Economic Security) Act extended the same protection to all homeowners with loans backed by the federal government, including FHA loans, VA loans and USDA loans.
While not covered by the federal relief efforts, many private mortgage holders, like Bank of America and Wells Fargo, are also offering forbearance plans and delaying foreclosures. To see if you qualify, contact your mortgage servicer. You should be ready to document the financial difficulty you’ve run into due to coronavirus and whether the situation is temporary or permanent.
Watch for foreclosure relief scams. Homeowners do not need to do anything to access foreclosure relief. Anyone who is served a notice of foreclosure within 60 days of March 18 is asked to contact their servicer. The Consumer Financial Protection Bureau also warns homeowners to beware of scams, including people or companies promising help in exchange for a large up-front fee or who direct you to sign confusing paperwork.
Seek expert help. The Department of Housing and Urban Development maintains a list of approved housing counselors across the country who can talk you through your options during this time.