The COVID-19 pandemic continues to touch every corner of the housing market and will continue to do so this year. In particular, the pandemic may result in low mortgage rates, affecting who will buy homes. However, a wave of foreclosures and ongoing housing inequality is also a concern for potential homebuyers, current homeowners, and the mortgage companies they work with.
All in all, the industry is walking a fine line and moving forward carefully, waiting to see how several factors play out, including home sales, home prices, the potential for economic fallout, and even Mortgage Broker Insurance rates. As it stands, let's look at the mortgage industry trends and how they are expected to evolve in 2021.
Mortgage Rates Will Rise
Mortgage rates have dipped to new lows, hitting record after record, week after week. However, as the COVID vaccination has spurred slow economic recovery, rates will trend up. According to the National Association of Realtors, mortgage rates will average out at 3.1 percent this year, up from 3 percent last year.
This means the refinancing boom that the industry saw last year should slow down by the second half of 2021. However, the refinancing window won't shut down completely. Some 20 million Americans have home loans at rates higher than 4 percent, meaning that some will want to refinance, even if rates move upward.
The Growth of the Suburbs
In the early days of the pandemic, buyers moved toward the suburbs with haste. Between April and June of 2020, 57 percent of buyers chose suburban locations, compared to only 50 percent before the pandemic, according to the National Association of Realtors.
Meanwhile, sales dropped slightly in small towns and rural areas, highlighting the major push to the suburbs where young families and professionals began to find solace in a new work-from-home environment. This trend will continue this year as new homebuyers opt for affordability, space, and a place where they can mix work and home life.
Evictions in the Rental Community
The Centers for Disease Control and Prevention (CDC) temporarily halted evictions for nonpayment of rent last year in response to people losing their jobs and not making their regular payments. The order prevented people from being forced out of their renter homes or apartments and into shelters.
The eviction moratorium didn't deposit money into landlords' bank accounts, who are also suffering financially in these times. And now, with the moratorium ended, tenants owe landlords upwards of $34 billion in rent that is past due, according to the National Council of State Housing Agencies. Unfortunately, this means that up to 8 million American households could be behind on rental payments by three or more months, opening the door to eviction.
About Axis Insurance Services, LLC
At Axis Insurance Services, LLC, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (877) 787-5258 to speak with one of our professionals.