Number of Mortgage Applications Increases
Demand for mortgages is increasing as a result of pent up demand for housing and low interest rates. Total mortgage application volume increased 8% for the week ending June 12th 2020. Some analysts predict that housing might be a bright spot in a recovering economy. US new home sales in May 2020 were up almost 17% compared to April 2020. Realtors are making use of technology to allow for virtual closings, self guided home tours and live streamed open houses. A new rule that took effect on April 17th allows banks who are overseen by the federal reserve, FDIC or Office of the Comptroller of Currency to postpone appraisals on residential or commercial properties for 120 days after the loan is closed. This rule is in place until the end of 2020.
Loans provided through the FHA, HUD, The VA, Freddie Mac or Fannie Mae will still require an appraisal before closing. Mortgage rates are projected to remain low and could drop below 3% before the end of the year. As a result of the economic impact of COVID-19, mortgage delinquencies increased by 723,000 million in May. The CARES Act allows homeowners with federally backed mortgages to suspend payments for up to a year however, only about half of US mortgages are federally backed.
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