What's Next? — Mortgage Trends You Need To Know
2020 has shaken up the world in ways we never imagined. With a year filled with so much uncertainty due to COVID-19, many industries have suffered significant losses. However, the mortgage industry has seen a massive increase in demand, due largely to record low-interest rates — driving home purchase sales and making mortgage refinancing a popular trend among homeowners.
As the year wraps up, you may be wondering what 2021 will have in store for the industry and what that could mean for your chances at finding success as an independent mortgage professional. Let’s take a look at what you should be prepared for:
Top 3 Predictions for the Mortgage Industry
1. The independent mortgage broker channel will grow
While retail, or direct-to-consumer, mortgage lenders make up roughly 80% of the market share, the wholesale mortgage broker channel has been steadily climbing in the last few years and grown to over 20% share over the past year. As wholesale lenders continue to develop cutting-edge technology with fast turn times and unprecedented levels of support for their broker partners, it’s likely the independent mortgage broker channel will continue to see a significant increase in the next year and beyond. Additionally, with a high demand for personalized and digital experiences, more borrowers are seeing the benefits of working with an independent mortgage broker as opposed to going through a retail lender or big bank.
Why? Independent mortgage brokers have access to shop hundreds of loan products to match their borrower’s unique financial needs—often resulting in lower monthly payments and an overall greater borrower experience. They also have access to technology that helps streamline the home loan process and gets their borrower to the closing table faster. Retail lenders, on the other hand, can only push their own products, which might not be the best deal on the market at the time a borrower is looking to lock in a loan or may result in a rejection of a borrower’s application altogether if they’re unable to offer a loan product that fits their individual situation.
2. Interest rates will continue to stay low
While there are some conflicting views on what interest rates will look like next year amid so much uncertainty with the COVID-19 pandemic, Fannie Mae speculates that the 30-year-fixed-rate mortgage will continue to dip under 3% throughout 2021. This is good news for your pipeline as consistently low rates could continue to lead to more homebuyers eager to finance a new or existing home.
However, this forecast could of course change if there’s an additional wave of COVID-19 cases, resulting in another downturn of the economy. But even if cases continue to rise, it’s likely interest rates would stay relatively the same.
3. Home sales will increase
Most experts are aligned when it comes to the prediction of home purchases in 2021. With a 10% increase in 2020 alone, it’s expected that there will continue to be a demand in the upcoming year. With that, home prices will continue to rise as the market gets more competitive and housing inventory decreases.
In addition, the millennial demographic will become more of a focus in 2021. They will continue to dominate the housing market as many have, or will soon be, reaching the age when they’re looking to settle down and purchase a home, likely for the first time. As an independent mortgage broker or loan officer, you can help personally guide your millennial borrowers throughout the process and ensure they’re making informed decisions in a booming market. And it’s been shown that personalized attention and referrals will go a long way with this particular audience.
These predictions bode well for anyone working in the mortgage industry, but particularly for those working in the wholesale channel. Independent mortgage brokers and loan officers are uniquely positioned to find loan products to fit their client’s needs, which means their opportunity for growth seems limitless in the coming year.
Are you interested in a career change? Consider becoming an independent mortgage broker or loan officer. It’s easier than you might think and our team at BeAMortgageBroker.com is here to help you every step of the way.