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Trends and Outlook for the 2021 Mortage Industry
The experts at the Home Buying Institute did us the favor of summarizing mortgage industry trends for 2021. The outlook for 2021 is surprisingly positive as if there is not a pandemic going on. Much like 2020, the housing market is going to hold strong compared to other sectors of the economy. Let’s dive into it.
The hot topic that always comes up is mortgage rates. For 2021 they are predicting rates will remain low, but perhaps not as low as 2020. The rates will continue to remain just below 3%, but there may be some movement into the second half of the year. We have already seen some creeping up happening in the second half of January, and experts are predicting further upward movement will occur further into 2021, but nothing too drastic.
Experts also predict home loan origination volume will decline due to the expected slowdown of the refinancing side. Although we will not see the same volume of 2020, MBA’s economic research team wrote: “Overall mortgage originations in 2021 are expected to fall to around $2.75T from 2020’s banner $3.57T total, but this would still be the second-highest total in the past 15 years.”
Another trend that has people talking is the paperless trends that are sweeping the industry. Due to the pandemic and safety precautions, the real estate and mortgage industries have pivoted to adopt digital, paperless procedures to allow them to conduct business safely. This trend is expected to stay due to consumers expecting this digital model moving forward. This also means the same will be expected of the moving industry. If your company has not shifted its model to a digital one, now is the time due to the precedent being set all across the housing industry.
Overall the housing market will continue to thrive in 2021. Rates will remain relatively flat, there will be solid purchase demand regardless of tight inventory and house price growth. A thriving housing market means a thriving demand for moving companies. Is your company up for the demand?
Biden’s New Policies Could Mean A Lift for Homebuyers and Builders
Change is in the air with the new Biden administration in so many regards including the housing industry. Reports say that Biden is going to focus on affordability for the housing market. Consumers are likely frustrated by low inventory and high house prices, and Biden is looking to change that with a handful of new policies he will try to get passed.
The first policy he is going to try to get passed is a $15,000 first-time homebuyer tax credit. This credit will be accessible right away by the buyer and can be used as their down payment. The data shows young homebuyer numbers are down. According to the National Association of Realtors, first-time homebuyers made up just 32% of all November homebuyers. Typically their percentage is closer to 40%. As promising as this policy is, officials, say this proposed policy is unlikely to be passed by Congress due to the volume of economic stimulus Biden is proposing.
The next policy is to try an increase of lending by the FHA. This is a low downpayment loan option favored by first-time homebuyers. Increasing lending by the FHA will not only help first-time homebuyers, but it will also help minority homebuyers too. This could also reduce monthly insurance premiums. Although banks fled from FHA lending after the Great Recession, experts are predicting there will be an effort made by the National Economic Council and the Biden team to persuade banks back in. Bringing the banks back in will make the availability of more affordable mortgages a reality.
Not to sound like a broken record, but mortgage rates are now on the rise. They are still at record lows, but as predicted by the section above, we will most likely see a gradual rise in mortgage rates over the course of 2021. David Stevens, a former Federal Housing Administration commissioner under the Obama administration and former CEO of the Mortgage Bankers Association predicts no surge but predicts the average rate for the 30-year fixed mortgage to be more in the mid-3% range.
*CNBC points out that Biden cannot control mortgage rates, but his influence of policies that will directly impact the economy should influence Federal decision-making.
More Than Half of Offers Made Sight Unseen in 2020
Now more than ever it has been made clear that business can continue virtually. This also applies to the real estate industry. Redfin reports that almost two thirds (63%) of people who bought a home last year made an offer without ever seeing the property in person. This blows the previous sight unseen offer records out of the water.
Virtual home tours aren’t going anywhere and other industries like the moving industry need to follow suit. Experts say this trend will continue well into 2021 and homeowners will come to expect this offering as a normal option. Offer virtual home estimates and the ability to do transactions online to stay competitive in this ever-evolving virtual landscape we now live in.
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Categories: Real Estate News