The global housing market made a significant upturn during the 2020 pandemic which had an immediate positive impact on the mortgage industry. There are many theories why from quick action in upgrading self-service mortgage technology that accommodated the pandemic social distancing restrictions to government incentives such as the Stamp Duty Holiday in the United Kingdom and stimulus checks in the United States. Presently, the housing and mortgage industries are continuing to see the same success in the early stages of 2021 that they did in 2020, and many experts have projected continued success in the upcoming months. Yet, there are looming uncertainties that premature confidence from the recent success may encourage mortgage rate increases which may generate a decline in home buying.
For many consumers, the novelty of the pandemic is fading, and they have acclimated to the “new normal”, yet others are still cautious that additional waves of the virus may continue to limit employment opportunities or cause future lockdowns. Some are worried that the limited inventory may negatively impact home buying, but creative buyers are seeking alternatives such as newly constructed, 3D, manufactured, and redeveloping blighted homes. Others fear that over-confidence and extended profitability in the housing market may encourage increased mortgage rates. Regardless of the specific factors, the mortgage industry must proactively prepare by anticipating their future target consumers and creating a way to reduce lag time by consistently upgrading the technology.
Understanding what motivates our current homebuyers and mortgage consumers is the key to forecasting future needs because housing and mortgage industries seemingly go hand in hand. But fortunately, there tends to be a need for mortgages even if the housing industry is on pause. For example, traditional mortgages are currently dominating the books, and most evidence points to the higher-end buyers supporting the recent increase. Lower-income and first-time buyers are still facing challenges with credit approval and/or meeting income down payment requirements.
The bottom line: Will the mortgage industry prevent a decline by being equally prepared and welcoming to all types of lending needs? It is vital to the long-term to stay focused on the overall lending portfolio of products and not be distracted by the current trends. Consistently perfecting the technology that streamlines the application, approval, and closing process, also ensuring that current customers can utilize self-service options to add-on to their existing relationship is key to organically expanding the portfolio. Understanding what gaps are currently preventing lower-income buyers and over-coming challenges that first-time homebuyers face will likely require manual diligence, but now is the time to invest in these initiatives. Acquiring new lending relationships, however large or small, and deepening existing relationships will prepare the mortgage industry for future economic changes.
Written by Kourtney Manley, Business Analyst at OnlineApplication