The report, titled "U.S. Economic and Housing Market Outlook: Spring 2021" examines various aspects of the housing market, including the current state of mortgage delinquencies. In it, Fannie Mae predicts that delinquency rates will remain above pre-pandemic levels throughout 2021, with most states seeing only slight decreases in delinquency rates by the end of the year.
The report cites the CARES Act and other government efforts to help keep borrowers in their homes as a key reason why delinquency rates have not seen a sharp increase thus far. The CARES Act suspended all foreclosures and evictions for borrowers with federally guaranteed mortgages, including those held by Fannie Mae and Freddie Mac.
Though delinquency rates are expected to return to pre-COVID levels, there are still potential risks that could cause them to remain elevated. Loss of employment or income, difficulty in making mortgage payments, and an inability to refinance due to market conditions are all factors that could contribute to an increase in delinquency rates.
The report provides an optimistic outlook for home prices in 2021, predicting that home prices will remain stable or even slightly increase. This is largely due to the fact that many buyers are entering the market at the same time, creating competition and driving up prices. Low mortgage interest rates are also contributing to the increased demand for homes.
In conclusion, Fannie Mae's report provides an optimistic outlook for the future of the housing market. Delinquency rates are expected to return to pre-COVID levels by the end of the year, while home prices are likely to remain stable or even increase. This is mainly due to the efforts of the government and the low interest rates offered on mortgages. That said, potential risks such as employment and income losses are still a concern. It is important for homeowners to stay informed of changing economic conditions and be prepared to adjust their spending habits accordingly.
This article was contributed on Dec 02, 2023
