Mortgage Delinquencies Dilemma1
Even with a 9% drop in the number of delinquent mortgage borrowers in July, there was a 20% increase of borrowers who were at least 90 days behind on payments. Marina Walsh, the MBA’s (Mortgage Bankers Association) vice president for industry analysis stated, “Fortunately, there are several mitigating factors that make this current spike in mortgage delinquencies different from the Great Recession. These factors include home-price gains, several years of home equity accumulation, and the loan deferral and modification options that present alternatives to foreclosure for distressed homeowners.”
Housing Market Stays Strong2
Homebuilders and building-related retailers continue showing gains even as COVID-19 rages on. In the second quarter of 2020, DIY shoppers armed with stimulus checks have helped Home Depot report sales and earnings 20% higher than a year ago. In addition, homebuilders’ stocks are trading at record highs. “Homebuyer demand remains robust, inventories are tight, and there is a need for new units to keep the pace of sales going. Housing is certainly one of the bright spots in the struggling economy.” stated Mike Fratantoni, chief economist of the MBA.
Federal Reserve Forecasts3
The Federal Open Market Committee lowered their estimate for economic growth for the remainder of 2020 according to the recently released July meeting minutes. The minutes stated, “Participants generally agreed that prospects for further substantial improvement in the labor market would depend on a broad and sustained reopening of businesses.” Fed officials also decided at the meeting to keep interest rates at zero and maintain monthly purchases of $120 billion of U.S. Treasurys and mortgage-backed securities.
The Diminished Dollar4
In August, even after Apple, Amazon, and Microsoft drove the three main U.S. stock indexes higher, the dollar index was able to hold on to gains made over its two-year low of 92.124. A senior market analyst at Western Union Business Solutions stated, “Severe selling that drove the U.S. dollar to 27-month lows eased after minutes from the Fed’s last meeting were read as less dovish. The details of the Fed’s late July meeting stopped short of signaling an imminent shift to putting a lid on Treasury yields or allowing inflation to run hotter.”
Turbulence for the Airline Industry5
As the coronavirus continues to affect the airline industry, American Airlines has announced a reduction in flying routes in October that greatly affects 15 small cities in the U.S. The director of the airport in Kalamazoo, Craig Williams said, “About 75% of our traffic is a business traveler. If we don't have a recovery anytime soon, then the airline industry is going to have to make some true hard looks at what is happening. And that'll impact small airports all across the country — ours included.”
Sources: 1Washington Post, 2CNN, 3MSN, 4Yahoo, 5CNNShare:
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