As a nation, we've experienced a formidable year—the pandemic, a yo-yo election, stocks rising and falling, not to mention a handful of heart-breaking natural disasters. If you're anything like me, you almost feel guilty thinking about the housing market and whether or not it's an appropriate time to purchase real estate. And as a potential home buyer, Considering how 2020 has unfolded I began to wonder out loud, "where do mortgages and loan lending currently stand in the marketplace?"
Chalk it up to a random bout of morbid curiosity or an innate desire to forecast what's to come. Still, I decided to do a little digging into the mortgage industry to uncover a handful of topics currently trending in the news. A little research revealed the following articles:
- MarketWatch's "What a COVID-19 vaccine would mean for mortgage rates and the housing market."
- ConsumerAffairs' "Home mortgage applications dropped sharply last week [Nov. 11, 2020]."
Did you immediately have follow-up questions? Don't worry. I did too. Read on how the ideas presented in these articles may affect the mortgage industry at large.
"Is it a Stable Housing Market Now?"
The short answer is yes. And people are actively buying or looking to buy. However, this wasn't the case earlier this year. MarketWatch's author, Jacob Passy, is quick to note the housing market took a considerable hit back in March, "Home sales all but ground to a halt as Americans stayed at home to avoid getting sick."
Interestingly, this practice prompted a surge for mortgage rates to turn lower—and lower and lower. Passy writes, "the nation saw the beginnings of a boom in refinancing activity, as homeowners welcomed the lowest interest rates on record." People started to buy homes during the pandemic because they A) could afford it, and B) wanted more space. More space became a huge motivation for many, especially considering working from home and remote-based procedures now take precedence. If you no longer have to commute, why not settle somewhere more affordable?
According to industry expert Mark Fleming, chief economist at First American Financial Corp, "the pandemic actually nudged the timeline forward for many millennial households who might have otherwise waited a few years to become homeowners." Any financial institution members reading this blog should take note of Fleming's observation. It clearly begs the question, "are you prepared to handle an influx demand of home seekers looking to fulfill home mortgage loans?"
To be fair, the housing market can (and will) change rapidly as more news regarding the state of affairs becomes known. Take the recent vaccine announcement from BioNTech and Pfizer into consideration. "While the world is still months away from seeing the distribution of an approved vaccine, the vaccine news has improved spirits among investors," writes Passy. This means the end of the pandemic would eventually push mortgage rates higher. So if you're in the market now, or have a list of customers looking to obtain a mortgage loan, it would pay to strike while the iron's hot.
"Is Now the Time to Buy?"
According to ConsumerAffairs' Mark Huffman, "The number of mortgage applications to purchase a home fell sharply [during the week of November 9-13] to a six-month low. It's a signal to people who have been thinking about a home purchase that now may be the time to pull the trigger."
Huffman also states that because of the marketplace, there are fewer buyers competing for homes. This is evident in the report published by Mortgage Bankers Association. Interesting to note, home prices are actually on the rise while interest rates are steadily going lower and lower. Why? Huffman explains, "If buyers are paying less interest, they can afford to pay more for the home, and sellers haven't been shy about asking for higher prices."
Once you do decide to go through with the process of pursuing a home, it all starts with checking in on your spending power. After all you want to take advantage of the low rates to leverage your optimal spend. As a customer you’re most likely asking yourself, “What is a feasible loan I can achieve, and how do I go about getting it?”
"Where to Start the Loan Process?"
Home buyers, or anyone seeking a mortgage investment for that matter, need a loan. Pure and simple. How do they go about getting the best rate, and successfully working directly with their financial institution to get there? Easy, LendingQB.
For those unfamiliar with LendingQB, it is MeridianLink's SaaS browser-based mortgage loan origination software (LOS). Chances are you might've already heard about it via our website or in the news. Heck, you might even know of a financial institution utilizing its capabilities now; or maybe you're in the discovery process and looking for a new loan origination software platform?
Whatever the case may be, LendingQB loan origination software has earned a solid reputation in the digital lending industry. With advanced technology, process automation, and a dedicated support staff, it's humbling to hear our clients say, "there's really no comparison to LendingQB."
Key elements for financial institutions:
- Eliminate Manual Workflows
- Automate Calculation of Fees
- Support-third Party Origination
LendingQB LOS is also partnered with more than 250 industry partners amassing more than 300 service integrations, from point-of-sale to closing. The Open API framework also allows lenders to innovate and build proprietary integrations.