Since the pandemic started interest rates have been at a historical low. With rising residential
property prices, particularly in the major cities, borrowers have eagerly invested in housing of all
types (condos, apartments and single dwellings). Additionally, people took advantage of falling
interest rates since the onset of COVID-19 and renegotiated their mortgage (4 percent increase).
According to a survey done in the US, 55 percent of respondents who currently do not have a
mortgage are planning to apply for a mortgage to purchase a home within the next two years to
benefit from the low-interest rates. Many experts are predicting rising interest rates within 2022,
which should slow down the market slightly.
Another recurring trend seems to be work from home arrangements, a direct result from large
companies trying to protect the health of their staff. The need of a home office at the same time as
low-interest rates had many interested in looking for bigger homes or better neighborhoods with
access to green spaces. A thing yet to determined is the long-term impact of the work-from-home
trend. If this continues for the foreseeable future, more people will be moving to markets where
they would prefer to live, not necessarily near their employer.
The COVID-19 pandemic was also the reason for mortgage technology to improve immensely. While
digital channels were the preferred choice for researching even before 2020, technologies like digital
mortgages and digital pre-approvals are on the rise since then. Especially younger generations prefer
online services and digital mortgage applications over the traditional channels.
For the past five years, many major banks and non-bank lenders have invested in either proprietary
or third-party technologies to improve various processes. The expansive list of steps that have been
addressed includes front-end platform modernization, workflow management, document extraction
and management, income and asset verification, employment verification, title verification, straight-through
processing, e-closings, automated compliance, and decisioning. In the same time non-bank
lenders had a noticeable growth in their market share. In 2020, the share of originations by non-bank
lenders leapt to nearly 70 percent. While these numbers stem from a handful of outperforming non-
banks, an overall growth has still happened, partly because of the speed, convenience, and
transparency that they offer mortgage customers. Consumers can benefit from having non-bank
lender choices, because many of these lenders have invested heavily in digitized interfaces that
make submitting an application, uploading documentation, and communicating with the lender
While median home prices are likely to increase at a modest rate, slightly higher fixed and adjustable
mortgage rates are expected next year due to higher inflationary pressures and the Fed buying
fewer mortgage-backed securities. Buyers and sellers should still enjoy the benefits of low mortgage
rates. Therefore, the buyer demand should continue to be driven by higher wages, improving
employment and rising stock market values. Experts expect 30-year-fixed mortgage rates to slowly
rise from around 3% to around 3.6 by the end of the current year, mostly attributed to the pandemic
subsiding and inflation continuing to linger.