A promising sign of recovery in the economy devastated by the pandemic has stagnated: fewer borrowers are resuming mortgage payments.
The proportion of homeowners who postponed mortgage payments had been steadily falling from June to November, an indication that people were returning to work and the economy was starting to recover. But the decline has practically stabilized since November, when the current wave of coronavirus cases has increased in communities across the country.
In the past two months, that group of homeowners has fallen by about 5.5%, according to the Mortgage Bankers Association. Although this fell from a peak of 8.55% in June, some economists are concerned about the stagnation of the tolerance rate – and fear that it may even start to rise with the reduction of jobs in the economy.
Other data indicate a slowdown in the US economy this winter and greater pressure on household finances. Employers cut jobs last month for the first time since spring. The number of job openings has decreased and claims for unemployment insurance remain high. Retail sales fell for three consecutive months.
“With the declining recovery and more unemployment claims, we are likely to see an increase in demand for indulgence,” said Ralph McLaughlin, chief economist at Haus, a home finance startup. “One of the safeguards that people have, if they own a home, is to ask for tolerance.”