Trends in the mortgage industry that will shape the rest of 2021

Trends in the mortgage industry that will shape the rest of 2021

Trends in the mortgage sector, for better or worse, tend to follow corresponding directions in the entire real estate market. But, when it comes to the forecast for the rest of 2021, there are a few key aspects to keep an eye out for — many of which continue over from a difficult 2020 and early 2021:

  • Lack of inventory
  • Changing interest rates
  • Rapid technology adoption

Inventory problems

Following the pandemic, the first half of 2021 revealed the lowest recorded housing inventory over many markets in the United States. The construction of new homes, like so many other production processes, was affected by shortages in building materials such as concrete and timber, resulting in a significant drop in new homes for sale.

Furthermore, most people spent more time at home in 2020 than at any other period in modern history. As houses have been converted into offices and schools over the last year, many individuals consider relocating, being in urge for additional room.

Typically, this dynamic benefits the seller since, when interest rates are lower, homebuyers are ready to borrow more and pay less interest over the life of the loan. The current market price for homes and interest rates are influenced by a lack of housing inventory as well as general economic instability.

Everything around the rates

The lack of inventory may have created a slowdown in new loan originations, but due to some low-interest rates, which are expected to remain in the low 3’s year-round, that slowdown was mainly compensated for by a significant rise in refinancing loans until about mid-year. The chance to lock in a cheap interest rate is an excellent chance for homebuyers. With high demand and, by extension, high housing prices, potential homebuyers can compensate by locking in a low rate.

Push for technological innovations

When COVID pushed the real estate sector to become digital, it fueled a similar movement in mortgage lending. Nevertheless, there are procedures in the mortgage business being decades old, relying mainly on the motto that it’s “exactly the way it was always done.” But in the end, it all comes down to customer experience. The fact is that advanced tech platforms should improve that experience and ultimate result.
With both the variety of proptech and fintech apps available, homebuyers can apply and qualify for a mortgage while being in the house they want to buy.

Mortgage companies, in turn, should keep up with the trends by using technology and improving efficiency. Moreover, the days of simply holding traditional open houses in real estate are over. Like everyone thought from the start that the virtual house touring technology would be a temporary event – now everyone is sure that it’s here to stay. Potential homebuyers started to expect virtual inspection and realistic 3D representations.

On the mortgage side, recruitment has also gone virtual. And it was and will continue to be a significant change for the sector. Most of the mortgage industry is built on relationships, the vast majority of which are established and maintained in person. But, for most of 2020, nearly everything went online, posing new challenges for recruiting.

The housing market will remain solid for the rest of the year as the economy continues to recover in the post-COVID-19 era. In addition, the real estate and mortgage sectors are continuously developing. It would be good to remember that “in the middle of the big crisis lies even bigger opportunity”, including the numerous real estate and mortgage industries opportunities as well.


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