Less missed mortgage payments
Residential mortgages saw the biggest gain in Q2 2021, with $10.81 billion in missed mortgage payments, a 11.5% improvement from Q1 2021 and a 30.5% improvement from Q4 2020. While $10.81 billion is still a considerable number, it's a vast improvement from Q2 2020, which saw over $19.6 billion in missed mortgage payments.
In addition, 3.7% have missed six or more payments, meaning they're 180-plus days defaulted on their mortgage, a common point when most banks consider the loan seriously delinquent. Only 1.2% of borrowers have missed 12 or more payments.
Again, the amount of additional debt carried seems to have an impact on the amount of missed mortgage payments, with 26.6% of borrowers who have missed on or more payments also having student loans.
Will this momentum last?
While things are looking up right now, there's no saying whether this momentum will last. Mortgage and eviction moratoriums were set to expire at the end of July 2021, but the CDC announced a new ban through Oct. 3, 2021. Some states and municipalities are working to extend certain protections, including California and New York, but that still accounts for nearly 2.86 million tenant households and 2.19 million borrower households at risk for losing their homes when moratoriums end.
The timing of the recovery is also coinciding with the rise in COVID cases once again, largely attributed to the delta variant, which is more contagious and can infect vaccinated individuals, making the spread of the virus more rampant. Some are concerned that the forward progress that's been achieved could be wiped away as quickly as it was gained, as mask mandates and social distancing measures are reinstated.
Businesses, including hotel and leisure, entertainment, retail, offices, and restaurants, could see a decrease in business activity over the next few quarters, resulting in another round of job losses or furloughs. Hopefully, businesses will find a way to stay open while still keeping employees and customers safe, but there will likely be a natural decline, particularly if COVID-19 numbers keep climbing.