One thing’s for certain, we’re in uncharted waters.
COVID-19 (Coronavirus) continues to disrupt our daily lives, and the mortgage industry is no different.
For starters, the VA continues to back home loans during the outbreak and is working hard to maintain a “business-as-usual” relationship with lenders for both purchases and refinances.
That said, thousands of companies are encouraging (if not requiring) employees to work from home, or worse yet, being forced to layoff staff, to stop the spread of COVID-19.
This can affect home loans in a number of ways, including increasing the amount of time it takes to close a loan.
But as the stock marketing continues to look for a bottom, other economic indicators remain strong for the time being, including the housing and mortgage markets.
Coronavirus and the housing market
As retail spending, especially at shopping malls, restaurants, and on travel have seen a huge drop off, there’s evidence to suggest the housing market will not suffer the same fate.
“The uncertainty around all of these numbers is much greater than normal,” Goldman Sachs Chief Economist Jan Hatzius said.
But there’s definitely no evidence that we’re starring down the barrel of another 2008.
Before we get into why the housing market is strong, let’s talk a little about what a recession actually means.
What is a recession?
The technical definition of a recession is two consecutive quarters of declines in the GDP. Due to the strong start of the first quarter of 2020, there’s a very good chance GDP will see some growth, if not remain flat.
The second quarter, however, is sure to be hard hit, with experts predicting GDP declines as high as 5 percent.
How long these quarantine orders last will be the deciding factor on whether or not we enter a recession.
Things to Know About VA Loans During Coronavirus
Here are a few things you need to know about VA Loans and the impacts from Coronavirus:
- The VA is working hard to ensure the loan process can continue, encouraging lenders to offer video conferencing and other electronic methods of communication for lenders, appraisers, title companies and VA personnel.
- The VA is working with lenders to help VA borrowers financially impacted by Coronavirus. If you know you won’t be able to make your mortgage payment this month or your payment will be delayed due to Coronavirus, contact your lender as soon as possible. If your lender isn’t cooperating, you’re urged to contact the VA.
- Interest rates are actually rising during this outbreak, due in part to the demand for refinances. Even with the U.S. Federal Reserve lowering its benchmark interest rate to near zero, mortgage rates soared to near 5% this week.