The Housing Market May Be Going in Two Different Directions
September 10, 2020
We wrote recently about the K-shaped recovery, where some aspects of the economy have bounced back quickly, but others struggle to regain their footing after the pandemic. Well, the housing market looks to be diverging in a way that is troubling some analysts.
On the one hand, mortgage originations reached a new record of $1.1 trillion as mortgage rates reached historic lows. The data comes from analytics firm Black Kinght Inc. New buyers and existing homeowners took advantage of these rates to buy new homes or, more frequently, refinance existing loans. Refinances accounted for 70% of the home loans issued in the quarter.
This stands in stark contrast to the millions of homeowners who are unable to pay their mortgages, let alone refinance. Mortgage delinquencies have spiked, up more than 450% from pre-pandemic levels. In July, about 2.25 million mortgages were at least 90 days late, according to Black Knight, the most since the 2008 financial crisis.