The U.S. mortgage forbearance rate fell to 7.67% in the last week of July, the lowest in three months, down from 7.74% a week earlier, according to a Mortgage Bankers Association report on Monday.
The share of Fannie Mae and Freddie Mac mortgages in forbearance dropped for the eighth consecutive week to 5.41%, the lowest since the beginning of April. The forbearance rate for Ginnie Mae loans, which includes mortgages backed by the Federal Housing Administration, rose 1 basis point to 10.28%.
“The forbearance share is decreasing for GSE loans but has slightly increased for Ginnie Mae loans,” said Mike Fratantoni, MBA’s chief economist. “The job market has cooled somewhat over the past few weeks, with layoffs increasing and other indications that the economic rebound may be losing some steam because of the rising COVID-19 cases throughout the country. It is therefore not surprising to see this situation first impact the Ginnie Mae segment of the market.”
Jobless claims have risen for two consecutive weeks as some of the nation’s largest states post record numbers of COVID-19 infections. Florida and Texas have surpassed the number of infections recorded for New York to become the No. 2 and No. 3 states for coronavirus cases in the U.S., behind California, the nation’s most populous state.
Federal Reserve Chairman Jerome Powell said last week the fate of the U.S. recovery depends on how well the COVID-19 pandemic is contained. Infections began surging after states began reopening in May and the U.S. now leads the world with 4.7 million cases, more than double the No. 2 nation of Brazil.
“The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check,” Powell told reporters on Wednesday.