What Will 2021 Look Like for the Mortgage Industry?

mortgage professionals working remotely

As 2020 draws to a close at long last, it’s time to look back at a year full of surprises and think through what they might mean for the future. It’s safe to say that no one’s predictions for this year were correct. Nobody could have predicted the impact COVID-19 would have on all our lives, or how little 2020 would look like 2019.

But with vaccines against the virus being approved and distributed at incredible speed, it’s beginning to look like 2021 may be different still. What impact will an incredibly eventful year have on the future of our industry?

The office will never be the same

For over fifteen years, reporters have been telling us that remote work and paperless offices were the future. But change was slow to come. Systemic changes in office culture are always unpopular, and learning new software is a lot of work and can slow down the usual business of an office. But 2020 forced our hand. In many states, lockdown orders came suddenly and had all of us scrambling to set up virtual desktops, download Zoom, and learn what a VPN is. For the first month of the pandemic, office work of all kinds ground almost to a halt as millions of employees tried to do all their normal work while learning how to use their home office—and homeschooling their kids, disinfecting their doorknobs, and trying to find an open grocery store.

But once the initial daze was over, mortgage industry professionals started to exploit the benefits of an all-virtual workplace and seek out new technology. Productivity is even higher now than it was before March. Covid lit a fire under offices that had been putting off upgrading their tech—in the office, not just at the point of sale. Now, getting a mortgage is quicker and more painless than ever. Many mortgage companies have deployed mortgage automation solutions to support their borrowers, sellers, and support staff. 

Money has never been this cheap

Yes, you read that right. Interest rates are literally at their lowest point in recorded history. Let’s break down why that is.

The Federal Reserve is buying up securities at an unprecedented rate. They want consumers to make big-ticket purchases like houses and businesses to get the economy jump-started and raise GDP. Consumers have been taking advantage in order to move out of dense cities and into the suburbs, although not in the numbers the Fed might have hoped for.

The other reason for the Fed’s decision is that they want mortgage rates to stabilize. Without government intervention, mortgages are linked to the stock market. While the stock market is ending the year on a high note, it’s been a bit of a mess overall. Remember that sharp dive caused by the initial lockdown order, followed by a sharp recovery? 

It’s in the Fed’s interest to keep what happens on Wall Street from affecting Main Street, or at least, affecting it too catastrophically. Whatever its long-term effects on consumers, all the work the Fed did in 2020 is definitely going to impact mortgage rates through 2021, and maybe beyond.

2021 may be the mortgage industry’s year…

Here’s the problem that underpins all the others: consumers don’t want to spend money right now. While sellers are still listing their homes for sale, they’re finding fewer and fewer takers. That’s because people are unsure about the future. When every industry is reeling from the effects of Covid, lockdowns, and the knock-on effects of contraction in other industries, no one knows how long their job is going to last, except perhaps for warehouse workers, healthcare employees, and TikTok personalities. Fewer people are in a position to buy a house. Nobody wants to sign a long-term mortgage if there’s a chance they might be on unemployment next month. Instead, any spare money goes into a savings account.

That could all change in the event of a successful vaccine rollout. If everything goes according to plan, America could reach herd immunity by summer. In that event, consumers might look at all the money they socked away in 2020 and, with newfound hope for the future, spend it all at once. For a lot of people, that might mean moving on up to a bigger home or even becoming a first-time buyer. 

Best of all, more consumer spending means more job security for people who work in customer service, food, and retail, and all their B2B suppliers. For those workers, more job security means less trepidation when it comes time to sign the mortgage. If volume and lender demand continues to be at an all-time high, mortgage companies will need to adopt the right technology to stay ahead of the curve and to support the modern borrower journey.

…Or it could be another 2020

Of course, that’s only if everything goes according to plan, and if there’s one thing this year has taught us, it’s that it’s never wise to bet all your money on everything going according to plan. There are many potential problems with the mass vaccination program. People may refuse to get vaccinated, either because of some yet-unknown side effect of the vaccine or general mistrust of the medical establishment. The supply chain that brings the vaccine from labs to hospitals at ultra-cold temperatures may fail. The virus may mutate and render the vaccine useless, sending immunologists back to the drawing board. Maybe a lot of people are just afraid of needles. In any case, we have to confront the possibility that we will not reach herd immunity in the next year. That would mean more infection spikes and, potentially, more lockdowns.

If that happens, we can expect 2021 to look a bit like 2020, but with some fun twists. On the one hand, some people will certainly get vaccinated, meaning we’re unlikely to see virus spikes as ferocious as the current one. On the other, people will be staying home, saving money, and tightening their belts for the second consecutive year. Lower consumer spending has a cumulative effect, and the scars of a second Covid year would be much deeper.

However, if we learned anything positive from 2020, it’s that this industry can adapt to anything and come back stronger. Just like 2020 prompted us to upgrade our office infrastructure and technology, the coming boom or bust will bring new challenges that teach us to be flexible and think on our feet. And as we look forward to 2021, we at least know to expect the unexpected.

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