INDIANAPOLIS (WTHR) — The housing market has become one of the hardest hit areas of the economy due to the coronavirus pandemic.
CoreLogic, a company that measures the health of mortgage loan performance, just released its monthly report in which serious loan delinquency is estimated to increase four-fold by the second half of 2021.
Dr. Frank Nothaft, chief economist for CoreLogic, said the ripple effect has been rapid.
"It's just remarkable how quickly things have changed, and with unemployment rates now at the highest level in 80 years, that's going to have a big repercussion on our family finances and savings that they have in the bank," Dr. Nothaft said. "For many families, they've got to make make their mortgage payments or their rental payments. Unless we see a quick reversal and movement in the economy, this will have lasting impacts on household finances and will ultimately impact the default rates that we see in the mortgage market."
Dr. Nothaft said while that news is startling, the recovery for the industry could happen quickly.
"We were expecting to have a really strong spring home buying season because prior to the pandemic, mortgage rates were low, and the unemployment rate was at a 15-year low during the month of February," Dr. Nothaft said. "But now, sales are down, but I do think they're well poised to bounce back as soon as jobs are coming back and as soon as the shelter-in-place orders are lifted."
Dr. Nothaft also said homeowners' finances were in a good place before the pandemic.
"We're [in a] fortunate position for this pandemic recession right now because the average family that owns a home has a record level of home equity wealth in their home," Dr. Nothaft said. "What we measured at CoreLogic was that the average family in the U.S. had $177,000 in home equity at the start of 2020. So, that's a good buffer and position to be in for this terrible pandemic recession that we've now fallen into."
However, there is a light at the end of the tunnel for homeowners who have lost their job or income during this public health crisis: They could be eligible to have their mortgage payments paused or lowered for up to a year.
If you are looking to see if you qualify, you should check with your current mortgage provider to get a better understanding of your existing mortgage payment situation. You also need to understand that this is not a mortgage holiday — you will have to repay the missed payments.