Mortgage Forbearance relief and how it is impacting consumers

My Neighbor’s House

My neighbor put their house on the market at the beginning of March for $700,000 and due to the COVID-19 outbreak has had very little traffic.  Over the weekend, just when they thought there was no hope of selling their home a group of pranksters teepeed their house.  Now they are under contract for $5.7 million!

(I thought a little real estate humor may help boost your spirit today!)

Conventional & Government Rates Diverge

Conventional mortgage rates are mostly unchanged from last week but government interest rates have spiked!  There is less investor appetite for government loans at this time because it is perceived that the performance of these loans given the current economic conditions will be difficult.  The assumption is that a greater number of FHA, VA, and USDA borrowers will request forbearance relief which hurts the mortgage servicing entity.  Speaking of forbearance…..


Have you heard from any of your past customers regarding forbearance options?  If not, I can almost certainly guarantee you will in the coming days.  In this week’s video I provide a summary of what I think consumers should consider when making a decision regarding forbearance options.

Please feel free to share this with others!

Current Outlook: floating

Mortgage Rates Improve on Heightened Geopolitical Tension

Home Loan Rates

Mortgage rates are at the best levels in six weeks in response to a rise in geopolitical tensions between the US and Iran.

Geopolitical tension

Last week a top Iranian official was assassinated by a US airstrike.  Iran has characterized the attack as an act of terrorism and has vowed a retaliation.  I hope and pray that diplomatic efforts can ease the tension between the two countries.

However, the fear over a heightened conflict is causing uncertainty in the financial markets and encouraging investors to shift capital out of the stock market into safer havens such as US treasuries and mortgage-backed bonds.

A Flight to Safety

Should tensions continue to escalate then we may see US mortgage rates continue to decline as investors park their money in safer places.

Jobs Week

This week’s economic calendar is fairly light until we get to Friday when the all-important jobs report will be released.  Analysts are expecting 160,000 new jobs created for the month of December.  The previous month saw 266,000 new jobs.

Generally, when the employment report is stronger than expected it is bad for mortgage rates and vice versa.

Closer to home

Here in Oregon job growth in 2019 was slower than the previous six years.  The Bureau of Economic Analysis is predicting slow and steady growth for the next two years.


From a technical perspective mortgage rates look like they have more to lose than to gain.  Therefore, I will recommend a locking bias.  However, should tensions between the US and Iran continue to escalate (and I hope they do not) then we should float.

Current Outlook: Locking bias

How long until an average home in Portland is worth $1.0 million?

Happy birthday Fats Domino who was born on this day in 1928.  This little-known musician is considered a pioneer of rock and roll music and started playing bars in New Orleans at the age of 10.

Domino’s single “Fat Man” was the first rock and roll record to sell more than 1,000,000 copies in the US.

Home prices in Portland

Speaking of one million, how long will it take for an average home in Portland to be worth $1,000,000?

According to today’s Case-Shiller Home Price index report home prices increased by 3.9% during 2018.  For a median priced home in Portland ($423,000) that appreciates by 3.9% it will take 23 years for the home to be worth $1,000,000 (2042).

According to the FHFA Home Price Index report, which only tracks home prices for homes with conforming (non-jumbo) mortgages, home prices increased by 4.92% during 2018.  For a median priced home in Portland ($423,000) that appreciates by 4.92% it will only take 18 years for the home to be worth $1,000,000 (2037).

Why is there a discrepancy between the two reports?  The discrepancy is likely related to the fact that higher priced homes, which are generally bought with jumbo mortgages, are not appreciating as much as median and lower priced homes which are secured by conforming loans.

The Federal Reserve

Fed Chairman Jerome Powell is scheduled to testify on Capitol Hill tomorrow.  The interest rate markets will be listening for clues on how monetary policy will evolve during 2019.  Last week, the Fed commented that they may slow rate hikes.


From a technical perspective interest rates have been trading in a sideways pattern.  If rates continue without much volatility then we could set ourselves up for a “breakout” which is when interest rates move sharply lower or higher (we never know in advance).

 Current Outlook: cautiously floating

Lower oil prices help home loan rates improve

A sincere THANK YOU to those who have served and continue to serve our country!

As an Oregonian I am proud that we are one of five states that honors our veterans by offering a subsidized home loan program which allows those who have served in the military to own a home with more attractive loan terms than a conventional loan.  Learn more about the ODVA loan program HERE.

Mortgage Rates

Although mortgage note rates are mainly unchanged from last week the underlying costs associated with each interest rate improved so overall rate sheets are more attractive for consumers to start this week.

Oil prices

Oil prices reached bear market territory last week meaning they are down 20%-25% off recent highs.  The  US, Russia, and Saudi Arabia have all recently boosted crude production which has increased supply while trade barriers have dampened demand.

Lower oil prices is good for mortgage rates because it is anti-inflationary.

The Fed

As expected the Fed did not hike short-term interest rates last week but hinted that they are likely to hike when they meet in mid-December.  That expectation is baked into the home loan rates available today.  As a reminder the Fed does not directly control mortgage rates but their comments can certainly influence them.

Mortgage delinquencies

Earlier today Corelogic released its monthly loan performance report.  It showed that mortgage delinquencies nationwide decreased to the lowest level in 12 years.  Only 4% of home loans are in some form of delinquency.  This is down from 4.6% a year ago.

Lower delinquencies could encourage lenders to ease credit requirements for loan approval.  This pressure coupled with a lack of enforcement from the Federal Government raises some concerns for me about irresponsible lending moving forward.

The Week Ahead

The economic calendar heats up starting on Wednesday when we’ll see the Consumer Price Index.  I will also be watching out for monthly Retail Sales due out Thursday and Industrial Production on Friday.

Current Outlook: floating