A promising sign of a recovery in the pandemic-ridden economy has stalled: fewer borrowers are resuming mortgage payments.
The proportion of homeowners delaying mortgage payments had fallen steadily from June to November, an indication that people were returning to work and that the economy was starting to recover. But the decline has largely leveled off since November, when the current wave of coronavirus cases in communities across the country spiked.
According to the Mortgage Bankers Association, that group of homeowners is up about 5.5% in the past two months. While that’s down from a peak of 8.55% in June, some economists are concerned about the declining forbearance rate – and fear it could even start to rise if the economy cuts jobs.
Other data points to a slowing US economy this winter and greater pressure on household finances. Employers cut jobs last month for the first time since spring. The number of vacancies has decreased and the claims for unemployment insurance remain high. Retail sales have fallen for three consecutive months.
“With the slowing recovery and more jobless claims, we’re likely to see greater demand for tolerance,” said Ralph McLaughlin, chief economist at Haus, a home financing start-up. “One of the safeguards people have when they own a home is to apply for tolerance.”