Fannie Mae forecasts mortgage rates under 3% for 2021

The average rate on a 30-year, fixed-rate mortgage could hit 2.9% in 2021, according to Fannie Mae's April housing forecast

The 30-year mortgage rate hit a historic low this year, but could 2021 bring an even lower rate? Fannie Mae’s economic and strategic research group thinks the average rate for a 30-year, fixed-rate mortgage will hit 2.9 percent in 2021.

Nearly 10% of FHA and VA borrowers are in forbearance

Total forbearance nearing 7%

Thanks to the continued impact of COVID-19 on the economy, approximately 10% of borrowers whose mortgages are backed by the Federal Housing Administration or the Department of Veterans Affairs are in forbearance.

The data comes courtesy of a new report from the Mortgage Bankers Association, which polled more than 50 mortgage servicers that collect payments on nearly 77% of the mortgage market.

According to those servicers, nearly 7% of the 38.3 million loans they service were in forbearance as of April 19, 2020.

That’s an increase of more than one full percentage point from the previous week’s total of 5.95%.

But the largest segment of borrowers in forbearance have mortgages backed by the FHA or VA. According to the report, 9.73% of the loans in Ginnie Mae’s portfolio are in forbearance. That’s an increase of 1.47% from the previous week’s total of 8.26%.

Ginnie Mae is the government agency that issues mortgage bonds backed by FHA and VA loans.

According to the MBA report, the share of Fannie Mae and Freddie Mac loans in forbearance also increased, rising from 4.64% to 5.46%. The share of other loans (those included in private-label securities or held in portfolio) in forbearance rose from 6.43% to 7.52%.

Fannie Mae, Freddie Mac: Mortgages in forbearance do not need to be paid back all at once

GSEs reiterate that lump sum repayments are not required

Fannie Mae and Freddie Mac each issued a statement Monday, reiterating that borrowers are not required to repay their missed payments all at once when their forbearance period ends.

The issue seems to stem from the lack of clarity in the CARES Act about what happens when a borrower’s forbearance period ends. The CARES Act stipulates that a borrower whose mortgage is backed by either the government or the GSEs who is experiencing a COVID-19-related hardship can request and must be granted forbearance of up to 180 days.

But the act doesn’t dictate what’s supposed to happen afterwards.