September 28, 2021

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3 mortgage industry trends that will define the rest of 2021

For better or for worse, trends in the mortgage industry tend to mirror corresponding trends across the real estate market. But there are definitely a few key things to look out for – many of which were carried 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 acceptance of technology

Inventory problems

Based on the pandemic, the first half of 2021 showed that there was a historically low housing stock In multiple markets in the US As with so many other production pipelines, the construction of new homes, along with shortages in building materials such as concrete and wood, led to a significant decline in newly purchased apartments.

In addition, a vast majority of people spent more time at home in 2020 than ever before in modern history. As homes have turned into offices and schools over the past year, many people want to move and find that they may want to think about whether they need more space.

The subsequent shortage of inventory, coupled with high demand, has resulted in buyers competing for property, offering incentives and prices well above the asking price. Most buyers end up doing it several offerswho work with brokers for longer periods of time due to increased competition.

Typically, this dynamic tends to favor the seller, as the lower interest rates make buyers willing to borrow more and pay less interest over the life of the loan. The low housing stock and general uncertainty in the economy affect the current home market price and interest rates.

Everything about the prices

The shortage of inventory could have led to a slack in loan re-lending, but thanks to some incredibly low interest rates, which are expected to remain in the lower range of 3 this year, this lull was compensated for by a significant increase in refinancing loans up to around the middle of the year. For home buyers, the ability to tie themselves to a low interest rate is proving to be a great opportunity. Because competition, and with it real estate prices, is exceptionally high, potential homebuyers can offset this by setting a low interest rate.

Push for technology

When COVID forced the real estate industry to go digital, gasoline was tossed on the same trend in mortgage lending. Yet there are still antiquated processes in the mortgage industry that rely heavily on the mantra that it has been “just the way it’s done” for decades. In the end, it comes down to the customer experience and the truth is that advanced technology platforms should improve that experience and the overall bottom line.

With myriad proptech and fintech apps, home buyers can apply and qualify for a mortgage via mobile apps while literally standing in the house they want to buy. As in so many other industries, the customer drives the need for innovation.

In return, mortgage lenders need to move with the times, implement technology and improve efficiency. In addition, on the property side, the days when only the traditional open houses were present are over. The virtual home touring technology that served as a stopgap is here to stay, and potential homebuyers are now expecting virtual walkthroughs and realistic 3D renderings.

On the mortgage side, recruiting has also been moved virtually, which was and will remain another significant adjustment for the industry. Much of the mortgage industry is based on relationships, most of which are usually forged and nurtured personally. For most of 2020, almost everything shifted online, which brought with it its own recruiting challenges.

Leveraging AI data to understand key industry players based on their alignment with an organization, culture, and leadership has enabled mortgage recruiters to use passive recruiting as a tactical growth tool. Companies that can build their recruiting pipelines into a software platform with CRM functionality will continue to adapt successfully.

For the remainder of this year, we will see a strong housing market as the post-COVID-19 world economy continues to recover. The real estate and mortgage industries are constantly evolving, as are those who operate in these industries. We would do well to remember that “there are great opportunities in the midst of any crisis,” including the expansive real estate and mortgage opportunities.

Eric Levin is the EVP of Customer Development at Model Match.

This column does not necessarily reflect the views of the editors of HousingWire or 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]