Mortgage Trends That Buckled Under The COVID-19 Pandemic and A Few Others That Didn’t
Most specialists predicted a few specific mortgage trends to watch out for and that was mortgage rates won’t budge in 2020. But the truth was stranger than the prediction, and mortgage rates did not budge much. Take a look at some of the other mortgage trends that promised to set off but could not because of the COVID-19 pandemic.
Mortgage Rates Failed to Take Off
National Association of Realtors and Freddie Mac, the Mortgage Bankers Association predicted that the mortgage rates would remain steady. The predictions also suggested that there would hardly be any increase towards the end of 2019 and 2020. But things took a drastic turn somewhere near February as COVID-19 spread panic around the world.
According to the NerdWallet, the average rate of a thirty-year stabilized rate fell almost half a percentage in a spate of ten days, to 3.37 percent in February. March saw a slight spike, it followed a downward trend since then. And the average was hovering around just over three percent in the fourth quarter.
Buying Homes Would Be Difficult!
Most homebuyers will find it tough to find homes for sale. As the prediction was that this inventory will continue with the downward trend will continue throughout 2020 and the years after. The truth is there were twenty percent fewer existing homes for sale in May 2020 in comparison to the previous years.
Sellers who put their homes on the market took it off the listing because of the fear of strangers affecting their homes. This trend will remain so for a while. And even in the second quarter of the year as sellers will not be willing to let strangers visit their property. Thus resulting in not just a fall in buying and selling of homes!
The Impact on First-Time Home-Buyers
At the beginning of the year, most experts predicted that there would be a dearth of low-priced homes and first time home buyers would be floundering to buy something they can call their own. The prediction turned out to be true and the sales dipped to an all-time low, read thirty percent, the median price, however, rose a notch, 2.3 percent.
So prices kept rising faster than the buyer’s incomes. First-time buyers wanted to wait it out, till the prices of homes stabilized and veered around the affordable zone. Home sales unlikely to pick up soon given the pandemic situation.
What are iBuyers? A company that requests an automated offer for your home. After you say yes, the company buys off your house, on your schedule, then refurbishes it after fixing it and then sell it off. Most experts predicted that iBuyers would get a grip over the new market.
However, the pandemic turned things around and their biggest clients stopped making offers thus halting their growth. Things can change in the latter part of 2020 and iBuyer companies have resumed their expansion of new markets.
The Refinancing Wave
The refinancing boom overtook the mortgage industry in February and March. Lenders had to battle it out with a deluge of refinancing applications. They scraped through the workload by not choosing to slash rates as they ideally would have! Refinance will gradually ebb out as a pool of refinancers is gradually reducing. And they will stay far away from refinancing again if rates fell even a small amount.
Housing Security- No Longer!
COVID-19 has led to numerous unemployment which rose from 3.5% to 14.7% in April. The Coronavirus Aid, Relief and Economic Security Act started during March, providing mortgage relief to the homeowners. The federal law offered rental relief and started on an eviction moratorium.
However, the initial plan was that these protections will remain valid until July 24, 2020. But it looks like that did not happen. Homeowners are susceptible to the expiry of the eviction moratorium and this may lead to many people being unhoused.
A Jump in 3D Home Tours
There was a rise in the use of 3D home tours as the pandemic hit hard and there was general fear among house sellers and they stopped letting potential buyers from visiting their homes. The 3D home tours allowed potential buyers to take a virtual tour, the technology mimics Google Street View.
This technology is likely to rise in popularity as it helps buyers visit multiple homes in a short period, without having to visit the home physically. These are just a few not-so-surprising mortgage trends. Most of these however are a result of the COVID-19 pandemic. We hope things go back to normal soon.
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