Mortgage experts Ann Thompson and Christian Wallace share how the pandemic changed
the mortgage market, along with a few insights about generational buying trends, home
affordability, and which cities are benefitting from ‘the great reshuffling.’
Here’s what they said:
First, refinancing activity will slow down.
Thompson said refinancing activity would slow by the third quarter of 2021, as average
mortgage rates reach 3.3 percent. However, she said, there are 20 million Americans who
have mortgage rates above 4 percent and will take advantage of current rates although they’re
above 2020’s historical lows.
“So [refinancing activity] should slow somewhat, but refinancing isn’t just about rates,” she
said. “It’s also about people reassessing their living space and potentially pulling money out
to improve their space where they’ve been spending a lot more time at home and potentially
improving their property for sale as well.”
“So, it’s not just about a lower rate, but it’s about clients’ other hopes and dreams,” she
added.
The focus on affordable housing will be greater than ever.
Although the pandemic provided plenty of opportunities for homebuyers and homeowners, it
also pushed millions of Americans to the brink of financial ruin with concerns about a wave
of evictions and foreclosures. Lawmakers and economists are concerned, too, with both
groups warning current home price trends could “choke off” a whole generation of buyers.
Thompson said Bank of America has its eyes on the affordable housing market and is
expanding its down payment assistance programs to help buyers surmount one of the leading
financial barriers to homeownership.
“Given the economic hardships, we’ve seen a strong focus on affordable homeownership
because that’s top of mind to assist those first-time homebuyers and those low to moderate-
income families in those communities as well,” she said. “We expanded our down payment
grant program and saw a lot more interest in it.”
As the market stabilizes, Thompson said, lenders are relaxing their borrowing standards,
which will provide more opportunities for lower-income Americans to purchase or refinance.
Secondary markets will continue to rule the day.
The pandemic and the following change to our living and working routines spurred what
experts have come to call “the great reshuffling,” or the move from coastal hubs to nearby or
far-flung suburbs. Wallace said that shift would continue well past the pandemic and begin
impacting lesser-known cities and small towns as buyers keep looking for a place with the perfect mix of amenities and affordability.
“I’ll use Austin as a perfect example,” she said. “You know, the cost of living in Austin has
started to go up [as] it was kind of a real popular market in 2020.”
“Now you’re looking in 2021, you’re starting to see San Antonio starting to be that kind of a
city,” she added. “Some of the smaller areas are gaining attention.”
Wallace said this migration shift could spur the revitalization of smaller cities trying to attract
millennials and other young professionals.
“I would love it personally if it were a revamp and revitalization for even smaller cities or
even towns that can become cities again,” she explained. “Now that everybody’s working
from home and making some adjustments, maybe we can see some of that regeneration come
through. So I think it will be kind of fun.”
Millennials still want to become homeowners.
Although millennials have become less sure about their ability to become homeowners due to
student loans, booming home price growth, and other financial barriers, Wallace said it
That doesn’t mean millennials have given up altogether.
“Previously, there was a lot of talk in regards to millennials not wanting to buy — they
wanted to be able to up and go [and] they wanted that freedom and the luxury to be able to
move,” she said. “But I think through last year, they all realized, ‘Okay, that’s all great, but I
need to build my roots [and] I want my own house.”
Thompson agreed and said a recent homebuyer survey found that 89 percent of millennials
“are motivated to buy” as rent growth accelerates. Furthermore, she said this spring might
provide an opportunity for millennials to enter the market as more sellers decide to list their
homes.
“I think what’s holding us back a little bit is, you know, inventory, and hopefully what we’ll
see as we go into spring is that inventory kind of opening up,” she said. “I do think the
environment is great for [sellers who] felt restricted [but wanted] to sell their home.”
Technology will continue to drive digital mortgage experiences.
Wallace and Thompson said digital mortgage transactions would be here to stay, especially as
consumers become more comfortable with the process and experience.
“I think that you’re going to see even more technology come into the whole homeownership
journey,” Wallace said.” So, I think it’s going to be something that’s going to be exciting as
we go through 2021 and 2022 — not just because of COVID.”
“I think the speed is going to be something that’s going to be continued, and it’s also the ease
— I mean, how great it is to sit in your living room, and you’re filling out your application for
your mortgage online, you’re able to get your docs online, you no longer have to go get
into your filing cabinet and pull all the documents [and] you’re able to do everything right
there,” she added.
Both women said the move toward digital is excellent for real estate professionals and
provides the opportunity for them to lead consumers through the experience.
“I don’t think there’s a client on the planet that wants to sit with us for two-and-a-half hours
getting data that we can get very easily,” Thompson said. “I think they’d rather talk about
rates, terms, potentially down payment grants, and other relevant guidance.”