Mortgage delinquencies now at a 21 year high.

[Dinner]

Even higher than in the Great Recession. We’d have to go back to 1999 when the tech bubble burst and we went into recession to find numbers this high and all indications are it is getting worse. These irresponsible Covid shutdowns are destroying lives, businesses (2/3rds of independent restaurants in the US are either permanently closed or will soon close), and the wider economy.

It was supposed to be a 15 day shut down to flatten the curve, we flattened it, yet now it has become “just stay shut forever or at least until after the election” at least in Democrat run areas. We know from comments by California Governor Gavin Newsom that it is absolutely politically motivated and designed to influence election results instead of being motivated by any reasonable public safety concerns.

I am afraid Krazy Kitty was right. All we needed to do was isolate the most vulnerable and let the healthy go about their lives simply observing social distancing, frequent hand washing, and wearing a mask. The economy should never shut down. It is not like containment will ever be effective in the long term any more than you can contain the flu in the long term.

https://youtu.be/QHbsxKA3bq0

[Dauphin]

Are these delinquencies or mortgage deferrals that are mandated Covid concessions?

[Dinner]

The commenter specifically said the word delinquent though the care act does allow people to do deferrals so they may also be included (I don’t know). At some point borrowers will have to make up those deferred payments though I wonder how many people who can’t make a single mortgage payment will be able to make multiple mortgage payments all at once. The other big issue is renters who don’t pay their rent causing landlords to have to defer payments.

Now, my house is paid off, inherited from my father when he passed away, so my only direct expense on housing for my family is the twice yearly property tax plus a yearly $240 HOA payment. A lot of people aren’t so lucky. The lock down is going to end poorly for many of them.

[Dauphin]

Pragmatically, a lender will extend the amortisation period. If you can afford it, they may demand payment in full as a bullet or increase repayments to match the new balance outstanding and amortisation period.

What are house prices and foreclosures doing. Despite it all, the markets I know have lower foreclosures (govt mandated) and higher house prices (god knows why). Some people are screwed by furlough and lockdown. Others (mostly the wealthier home owning types) seem to be doing ok.

[Dauphin]

Mortgage rates are also insanely low. Real hit will be when rates start going up. If they ever do.

[Dinner]

Pragmatically, a lender will extend the amortisation period. If you can afford it, they may demand payment in full as a bullet or increase repayments to match the new balance outstanding and amortisation period.

What are house prices and foreclosures doing. Despite it all, the markets I know have lower foreclosures (govt mandated) and higher house prices (god knows why). Some people are screwed by furlough and lockdown. Others (mostly the wealthier home owning types) seem to be doing ok.

Yes, the ones most likely to be in trouble are the folks who were highly in debt and just barely making it to begin with. Lose of a job and they are off the cliff. It is one of the reasons I don’t carry any debt. You just sleep better at night knowing you don’t have big bills to pay.

WRT foreclosures and evictions (for renters) almost none right now as both the feds and many states have passed laws closing all of those down until after the new year (in California the state has everything paused all the way until February). The problem is under the Cares Act those people who fell behind on mortgages or rents have just two months to bring everything current after the protections end and I will bet most won’t make it. Now, a home owner can request a refinance or a loan modification but we will have to wait and see how willing lenders are to make modifications.

Especially since individual banks no longer keep these loans on their books and instead repackaged them as Mortgage Backed Securities which then sold shares to dozens of not hundreds of different investors. All of them would also have to agree to loan modifications which might not even be possible because then they’d have to agree to modifications for every loan in the MBS. The smart ones will stay current and if they can’t then a refi is probably easier than a loan modification. Getting one when you are already delinquent though will be hard.

[Dinner]

Mortgage rates are also insanely low. Real hit will be when rates start going up. If they ever do.

I saw a fixed 1.99% offer for people with good credit who have at least 80% equity. No points, fees, or anything added to the loan balance. 15 or 30 year option.

[Dauphin]

I’ve just got 1.74%. House purchase closes next week.

[Dinner]

I’ve just got 1.74%. House purchase closes next week.

Hmm, I assume that is a Canadian bank and the offer is not available in the US? Each point is worth about $4500 per year in interest savings, given a typical (US) mortgage. My sister and I co-own three rental houses (about $100,000 in mortgage owed per rental town house) I am wondering if it is worth refinancing. It depends upon points, fees, and how much is added to the balance as those costs would have to be calculated into a repayment period. After the repayment period it would all be gravy.

I personally would like to eliminate all debt but don’t want to kick in extra as my sister officially owns half. No sense in me paying more when she would get half.

[Dauphin]

My understanding is that in the US you generally go for long term fixed (15 or 30 years), whereas you'll get those lower rates for short term fixed. Mine is 5-year though with a $2k cashback on drawdown (so they are paying me to get the loan, madness).

I suggest you try and negotiate. My rate was well below listed price, but being staff I knew exactly what was possible.

[EPW]

I got 2.8% for a 30 year mortgage in May.

[Gertrude]

The commenter specifically said the word delinquent though the care act does allow people to do deferrals so they may also be included (I don’t know). At some point borrowers will have to make up those deferred payments though I wonder how many people who can’t make a single mortgage payment will be able to make multiple mortgage payments all at once. The other big issue is renters who don’t pay their rent causing landlords to have to defer payments.

Now, my house is paid off, inherited from my father when he passed away, so my only direct expense on housing for my family is the twice yearly property tax plus a yearly $240 HOA payment. A lot of people aren’t so lucky. The lock down is going to end poorly for many of them.

Rents have fallen significantly in many suburbs here in Sydney Australia. Some suburbs have fallen up to 16% this year. OTH Rents have increased in a few suburbs. I think we are going to see a whole lot more pain for mortgages. The banks will need to be very understanding.

It is not just houses. Vacancies for commercial properties have increased and malls are facing tighter trading conditions particularly since the lockdowns precipitated a surge in online shopping.

A shop near me was evicted four months ago and is still empty, along with ll the vacant shops nearby.

[Dinner]

Yeah, commercial property is getting hammered with all the work from home and shopping online while restaurants seem to be going out of business left and right. In the news I have heard around 2/3rds of independent family owned restaurants either have or soon will be closing their doors forever. That is going to leave a lot of empty buildings and either developers or real estate investment companies going bust.

[Bereta_Eder]

Only socialists pay their debts.
Neoliberals just steal the state

[Gertrude]

Yeah, commercial property is getting hammered with all the work from home and shopping online while restaurants seem to be going out of business left and right. In the news I have heard around 2/3rds of independent family owned restaurants either have or soon will be closing their doors forever. That is going to leave a lot of empty buildings and either developers or real estate investment companies going bust.

A lot of shopping centres (malls) are coming from increasing pressure from tenants to lower rents and vacancy rates are increasing. On line shopping is definitely impacting brick and mortar shop and trend is sure to continue. Also snack bars and cafes in city centres are struggling now that more people are working from home.