3 mortgage industry trends that will define the rest of 2021

There are still not enough houses to buy

For better or worse, trends in the mortgage industry tend to mirror corresponding trends in the overall real estate market. But there are definitely a few main things to looks out for — many of which are carrying over from a turbulent 2020 and early 2021 — when it comes to the upcoming landscape for the rest of 2021:

  • Lack of inventory
  • Fluctuating interest rates
  • Increased adoption of technology

Inventory issues

Emerging out of the pandemic, the first half of 2021 showed that there is a historically low housing inventory across multiple markets in the U.S. Like so many other production pipelines, the construction of new homes, along with shortages in building materials like concrete and lumber, caused a significant decrease in new homes for purchase.

In addition, a vast majority of people spent more time at home in 2020 than ever before in modern history. As homes morphed into offices and schools over the last year, many people are looking to move, realizing they might want to start thinking about whether they need more space.

The subsequent lack of inventory, coupled with the high demand, has caused buyers to compete for properties, offering incentives and prices way above the asking price. Most buyers end up making multiple offers, working with brokers over more extended periods due to increased competition.

Typically, this dynamic tends to favor the seller because, thanks to the lower interest rates, buyers are willing to borrow more and pay less interest over the life of the loan. Low housing inventory and the general uncertainty in the economy all factor into the current market price for homes and interest rates.

All about the rates

The lack of inventory might have caused a lull in terms of new loan originations, but thanks to some incredibly low interest rates, which are projected to stay in the low 3’s throughout this year, that lull was primarily made up for by a considerable increase in refinancing loans until about mid-year. For homebuyers, the ability to get locked into a low interest rate proves to be a great opportunity. With competition and, by extension, housing prices being extraordinarily high, prospective homebuyers can counterbalance this by locking in a low rate.

Push for tech

When COVID forced the real estate industry to get digital, gasoline was thrown on the same trend within mortgage lending. Still, there remain processes within the mortgage industry that remain antiquated, relying heavily on the mantra that it’s “just the way it’s been done” for decades. In the end, what it comes down to is customer experience and the truth of the matter is that progressive technology platforms should improve that experience and overall outcome.

With the myriad of the proptech and fintech apps out there, homebuyers can apply and qualify for a mortgage via mobile apps while they’re literally standing in the house they wish to buy. Like in so many other industries, the customer is driving the need for innovation.

In turn, mortgage companies need to get with the times, implement technology and improve efficiency. In addition, on the real estate side, the days of having only the traditional open houses are gone. The virtual home touring technology that has served as a stop-gap is here to stay, and prospective homebuyers have come to expect virtual walkthroughs and realistic 3D renderings.

On the mortgage side, recruiting has gone virtual as well, which has been and will continue to be another significant adjustment for the industry. So much of the mortgage industry is based on relationships, most of which are typically forged and maintained in person. For most of 2020, almost all of that moved online, which created its own kind of challenges for recruitment.

Utilizing data from AI to understand key players in the industry based on their match to an organization, culture and leadership has allowed mortgage recruiters to use passive recruiting as a tactical growth tool. Companies that can build their recruiting pipelines into a software platform incorporating CRM functionalities will be the ones who continue to adjust successfully.

The rest of this year, we will see a strong housing market as the economy continues to recover in the post-COVID-19 world. The real estate and mortgage industries are constantly evolving, as are those who work within those industries. We can do well to remember that “in the midst of every crisis lies great opportunity,” including the expansive opportunities in the real estate and mortgage realms.

Eric Levin is EVP of Client Development at Model Match.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:
Eric Levin at [email protected]

To contact the editor responsible for this story:
Sarah Wheeler at [email protected]

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