What We’ve Learned From the Coronavirus Pandemic
To say that the COVID-19 pandemic has changed the mortgage industry (in fact, the world!) would be a huge understatement. Lending hasn’t been business as usual for some time.
Even though the pandemic hit the economy like a wrecking ball, there were still reasons for optimism.
Thanks to historically low interest rates that hit in early 2020, homebuying and refinancing have experienced a massive jump.
According to the Mortgage Bankers Association, mortgage applications were up 55% from 2019, and refinance applications were up an eye-popping 192% from 2019.
We’re still feeling the shifting landscape, but there are some key lessons to be learned from the pandemic.
There has always been a trend in the mortgage industry to embrace technology, but in a world where people are reluctant to step outside, let alone into an office or other people’s homes, that trend has been kicked into high gear.
Virtual tours lead the way. Movie-grade videos show the house in a way that is something straight out of Hollywood. Interested parties can view online or even ask for a DVD.
Even appraisals are turning to a hands-off approach. Turning to what’s called a “desktop” or “drive-by” appraisal, the appraiser relies on photos and other available information of the home, including other properties in the real estate multiple-listing service, and public records to determine value.
There’s no face-to-face contact with anyone involved.
As for those looking to buy, according to a recent survey, the importance of lenders offering digital solutions such as online applications during the lending process was at an all-time high for borrowers in 2020, with 58% saying the availability of an online application would affect their lender decision.
Another shows that twice as many digital home loans were processed in 2020 compared to 2019.
Add to that, Market Watch says more lenders than ever are gearing up to digitize their processes as a result of the pandemic — giving buyers the opportunity to meet with loan officers in person, via the phone, or online.
That’s the power of technology.
Fortunately, we’re ahead of the curve here. We offer the latest high-tech advantages to get it all done online.
Govt Spends Big
It’s hard to believe, but by some estimates, the government injected $4 trillion into the economy hoping to keep businesses and workers afloat. That’s trillion with a T. It rolled out many emergency-lending programs, nicked interest rates to near-zero, and pumped trillions of dollars into the bond markets.
That staggering amount propped up businesses and the lending sector. And many economists say created stability in the marketplace too, which in turn helped create the low-interest rate environment that nudged first-time buyers into homes.
As we head into an economy post-stimulus, we will have to see how the long-term shudders will be felt. But it feels like we rode out the storm to calmer waters.
Given the Chance, People Want to Own
As soon as people were free of the office and working from home, they seized the opportunity to buy homes — a valuable lesson from the pandemic.
Even if they knew they’d be back to the office someday, they took the opportunity to abandon renting, or move someplace they preferred.
Home prices soared as a result. And a shortage arrived shortly after that.
Then, new building slowed to a trickle. Partly because laborers were in short supply and partly because savvy suppliers wanted to artificially raise the value of their inventory.
Wood was at a premium … and not just lumber: Suppliers for most building materials raised their prices in part because workers were unable to show up for their jobs.
Who’s to say what will work the next time we face a pandemic? Or any disaster? After all, every catastrophe brings its own set of circumstances. But that won’t stop us from learning all we can from what we have just been through.
For example, we now know we are more than capable of working remotely. It’s taught us a lot, in fact.
It certainly has highlighted the importance of working together as a team.
Above all, here at home with the Hamilton family, I can say with confidence that we’ll be able to adapt to face any type of problem.
Sure, we can’t let our guard down — no one is saying that. We will remain on alert into the recovery period and beyond, and be better prepared for whatever the future brings.