Mortgage Payment Deferral Unintended Consequences

It was reported today that 4,600,000 homeowners are currently in payment deferral.  This number represents 8.7% of all homes with mortgages.  Many of those who have not been making their payments have been running into significant challenges when trying to refi to take advantage of historically low mortgage interest rates.  They are finding that they need to catch up on missed payments before being able to do so.  Many are finding that lenders are not willing to refi them until they are not only caught up, but have a 6 month history of on time payments after participating in the deferral program.  For many, the missed opportunity cost of missing payments is much greater than they anticipated when applying for the program.

US stocks started the day strong and have since faded into the red as fears of a second round of Covid-19 cases brings uncertainty to the investment world.  Both Arizona and Florida reported record high cases yesterday.  With some businesses considering shutting down until the risk subsides, there is reason to be concerned.

Day trading activities have spiked since Covid-19, which has contributed to increased volatility stocks have been experiencing.  Since many day traders are inexperienced investors, this should be a concern to those seeking stability in the stock market.  When stocks experience their next fall, may novice traders are expected to get hurt.  That may tame the pace of short term opportunity investors, which would help improve stability in the market.

With bonds trading in a short range, there is little benefit to float.