The Positive State of COVID-19 Home-Buying and Refinancing a Welcome Surprise

woman using laptop to shop for a home
Steve Hewins Photo
CU Members Mortgage

4 minutes

Credit union mortgage services are in high demand, providing a very nice surprise during a very volatile pandemic year.

If you follow the latest homeowner trends, today’s autumn 2020 housing market is unlike any other for many reasons. The pandemic and its toll on the economy never suffocated the housing market. Here’s why…

  • Real estate technology proved a huge help in shielding and bolstering the housing market. There was never a huge backlash in housing when COVID-19 hit, with the convenience of technology playing a huge role. Homebuyer websites such as Trulia, Zillow, Redfin and online home buying applications were already proven highly-effective and reliable—making searching, buying and financing a home easier than ever.
  • Those working in real estate acclimated quickly and worked through big challenges. A positive tone was set from the very beginning to deliver what was needed from a transactional and health standpoint, including digital/online platforms for disclosures, virtual showings, remote notarizations, contactless escrow closings and many other technological applications and innovations. Nearly everybody in escrow, appraisal, inspection, lending and many more stepped up to the plate with ingenious fixes for the issues at hand.
  • The Federal Reserve and Congress did not waste time in addressing economic and lending issues. In the past, it has taken days-on-end for these two governmental bodies to act—but not during this crisis. This time, both the Fed and congressional lawmakers worked on the problem through monetary and fiscal policy rapidly, sending trillions of dollars where it was needed. Also, federal governmental entities that regulate lending and the housing market acknowledged the problem right away to aid regulatory relief efforts for individuals, families and lenders.
  • While everyone was impacted by COVID-19 in one way or another, the widespread option for people to work remotely provided a large number of homeowners and potential homeowners financial stability through the crisis. That financial stability allowed them to pursue the dream of homeownership and sustained homeownership, some buying new homes and others refinancing to take the opportunity of lowering their rate. Purchases and refinances were able to continue even in the midst of credit tightening measures lenders took during the pandemic.
  • Forbearance and deferment requests existed, but not near the levels expected. Many of the homeowners under forbearance even continued to make payments and stay current on their mortgages. Unfortunately, many small-business owners, manufacturing employees and service industry members were most severely impacted financially as savings and reserves were depleted. For those individuals, we will see the latency in potential home-buying, delayed until down the road when things bounce back and savings can be restored.
  • In general, it’s felt like a seller’s market for several years. A tight real estate market was already making its mark before the coronavirus arrived, with the market not being “overbuilt” since the Great Recession a decade ago. This past decade, homebuilders slowed down and let the market catch up. But after that, many regions and cities were essentially “underbuilding” for various reasons. That period—joined by Millennial household formation and a steady build-up of general demand for homes in a declining interest rate environment—has translated to new and existing home inventory not being able to keep up with buyers’ demands.
  • Suppliers for homebuilders and project developers were shut down, however, a majority have gone back to work. This is only expected to get better as the economy continues healing. Middle-companies and manufacturers that provide home products and services, including material suppliers, retailers, fabrication plants, lumber and wood factories and more, were dealing with short-term logistical problems and commodity shortfalls during the throws of the pandemic’s immediate crisis point. But those days are nearly over. These businesses are actively delivering what the real estate market needs.
  • Mortgage rates recently slumped to record lows. Historically speaking, it is very cheap to refinance or purchase a house right now. The supply of investors in the financial markets willing to invest in mortgages on the back-end (as well as the Federal Reserve’s actions) has put downward pressure on consumer borrowing costs, with the monthly savings positively impacting existing owners and buyers simultaneously.
  • Today’s “crisis” is not the mortgage meltdown that took place in 2008 with bad financial market investments. This year’s recession was sparked entirely by the shutdown caused by the pandemic. We know it will take time for the economy to recover, but the scenario is not a financial market crisis like we saw in 2008. In general, the mortgage market and its underwriting were pretty healthy going into COVID-19, which is greatly aiding real estate today.
  • People have been driven into their homes, not out of them. Different state and local-mandated shutdowns are responsible for this. The one place not off-limits during the pandemic from March to May was home. That doesn’t mean everything else is closed, as evidenced by limited and full re-openings of businesses and public places across the nation. However, life-styling at home is where many people, quite literally, are spending much more of their time today, and as they do, they are looking to remodel their homes or simply find a new one that better meets their needs. This has also contributed to a strong housing market.

For all these reasons, credit union mortgage services are in high demand and still growing credit union mortgage market share, providing a very nice surprise during a very volatile pandemic year.  

Steve Hewins is SVP/CU members at CUESolutions Bronze provider CU Members Mortgage, Dallas.

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