More than 3.4 million American mortgage borrowers are now in forbearance—essentially hitting the pause button on their monthly payments for the foreseeable future. 

According to the latest data from financial data firm Black Knight, that’s up from 2.9 million one week ago. In total, 6.4% of all U.S. mortgage loans are now in forbearance.

FHA and VA loans have seen the biggest surge in forbearance volume. Currently, almost 9% of these loans are in forbearance, while just 5.6% of mortgages backed by Fannie Mae and Freddie Mac are.

The Market Composite Index, a measure of mortgage loan application volume, decreased 0.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.1 percent compared with the previous week.

This is explained by the number of new property sales which has dropped by 70% since the start of the restrictions on coronaviruses.

The refinancing index fell 1% from the previous week and was 225% higher than the same week a year ago. The seasonally adjusted purchases index increased by 2% compared to the previous week. The unadjusted purchases index rose 3% from the previous week and was 31% lower than the same week a year ago.

Mortgage loan applications remained essentially unchanged last week as a slight drop in refinancing activity was offset by a 2% increase in purchase requests. California and Washington, two states hard hit by COVID -19, experienced another week of increasing activity - partly resulting in Despite the weekly increase, the purchasing index remained close to its lowest level since 2015 and was more than 30% lower than that of last year, "said Joel Kan, associate vice president of economic and industrial forecasting at MBA. "The economic downturn linked to the pandemic has caused some buyers and sellers to delay their decisions until there are signs of a turnaround. This has led to a reduction in buyer traffic, a decrease in stocks and a drop sales of existing homes in March at their slowest annual rate in almost a year. "

Economic uncertainty, stemming from particularly dire economic data led to a fall in 10-year Treasury yields in the week.

The uptick in mortgage rates, however, had less to do with U.S Treasury yields and more to do with the setting of rates by lenders. Lenders have begun to price in a risk premium into mortgage rates that have led to a break in the correlation between yields and mortgage rates.

10-year Treasury yields also fell in the week in response to WTI’s May Futures sliding into negative territory early in the week.