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5 ways the pandemic mortgage boom changed the market

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Although sales activity slowed at the beginning of the pandemic, rock-bottom mortgage rates resulted in a highly competitive season for home buying and record levels of refinancing. However, mortgage rates are rising again, and the 30-year fixed mortgage rate will finally rise above three percent in early March.

Ann Thompson, Executive, Consumer Lending at Bank of America, and Christian Wallace, Head of Sales at Better.com, gave the Connect Now crowd an overview of the 2020 mortgage market as well as some insight into generational buying trends, home affordability and which cities to benefit from the big shuffle again. ‘

This is what they said:

Refinancing activities will slow down

Thompson said refinancing activity will slow down through the third quarter of 2021 as average mortgage rates hit 3.3 percent. However, she said there are 20 million Americans who have mortgage rates above 4 percent and will take advantage of current rates even though they are above 2020 all-time lows.

“So [refinancing activity] should slow down a bit, but refinance isn’t all about interest rates, ”she said. “It’s also about people re-evaluating their living space and potentially getting money out of it to upgrade their space where they spent much more time at home, and possibly also improve their properties for sale.”

“So it’s not just about a lower rate, it’s also about the other hopes and dreams of customers,” she added.

The focus on affordable housing will be greater than ever

Although the pandemic offered home buyers and homeowners many opportunities, it also brought millions of Americans to the brink of financial ruin, with concerns over a wave of evictions and foreclosures. Legislators and economists are also concerned, as both groups warn that current real estate price developments could “choke” a generation of buyers.

According to Thompson, Bank of America is looking at the affordable housing market and is expanding its down payment support programs to help buyers overcome one of the top financial barriers to home ownership.

“In the face of economic troubles, we’ve seen really strong focus on affordable home ownership as it’s really important to helping first-time buyers and the low-to-middle-income families in these communities,” she said. “We’ve expanded our down payment grant program and seen a lot more interest in it.”

As the market stabilizes, lenders are easing lending standards, Thompson said, giving lower-income Americans more options to buy or refinance.

Secondary markets will continue to rule the day

The pandemic and the resulting change in our life and work routines have stimulated what experts refer to as a “major reshuffle” or moving from coastal centers to nearby or distant suburbs. Wallace said the change will continue well beyond the pandemic and affect lesser-known towns and cities as shoppers continue to look for a place with the perfect blend of convenience and affordability.

“I’ll use Austin as a really good example,” she said. “You know, the cost of living in Austin has gone up [as] It was kind of a very popular market in 2020. “

“Now that you look in 2021, you see San Antonio becoming such a city,” she added. “Some of the smaller areas are attracting attention.”

Wallace said this migration shift could spur the revitalization of smaller cities trying to attract millennials and other young professionals.

“I would personally love if it were some kind of redesign and revitalization for even smaller cities or even cities that can become cities again,” she explained. “Now that everyone is working from home and making some adjustments, we may be able to see some of that regeneration coming through. I think it will be really fun. “

Millennials still want to become homeowners

Though millennials are less sure of becoming homeowners because of student loans, booming price growth, and other financial barriers, Wallace doesn’t mean millennials have given up entirely.

“There used to be a lot of talk about millennials not wanting to buy – they wanted to be able to step up and go [and] They wanted that freedom and luxury to move, ”she said. “But I think last year they all noticed, ‘Okay, this is all great, but I have to build my own roots [and] I want my own house. “

Thompson agreed, saying a recent survey of homebuyers found that 89 percent of millennials are “motivated to buy” when rental growth accelerates. Additionally, she said this spring could be an opportunity for millennials to get into the market as more sellers make the decision to list their homes.

“I think what is holding us back a little is that you know inventory and hopefully when we go into spring we will see that inventory open up,” she said. “I think the environment is great for [sellers who] felt really restricted [but wanted] to sell their house. “

Technology will continue to drive the digital mortgage experience

Wallace and Thompson said digital mortgage transactions will stay here, especially as consumers become happier with the process and experience.

“I think you will be adding more technology to the entire home ownership journey,” said Wallace. “I think it’s going to be something exciting when we go through 2021 and 2022 – not just because of COVID.” . ”

“I think the speed will be something that will continue, and so is the ease – I mean how great it is to sit in your living room and fill out your mortgage application online, that’s you when you get your documents.” online, you no longer have to go to your filing cabinet and call up all the documents [and] You can do everything right there, ”she added.

Both women said the move towards digital was great for real estate professionals and gave them an opportunity to walk consumers through the experience.

“I don’t think there is a customer on the planet who wants to sit with us for two and a half hours to get data that we can get very easily,” Thompson said. “I think they’d rather talk about tariffs, terms, potential down payment grants and other relevant guidelines.”

Email Marian McPherson

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