The ongoing impact of the global pandemic has left its mark universally, creating disruption in some industries and opportunities in others.
The mortgage market is no different, so here is a look at the influence that COVID-19 has had over it in the past year, and how it will continue to be shaped by the evolving crisis going forward.
The rise of digital lending
In plenty of places it became either impractical or entirely illegal to visit bricks and mortar locations in search of mortgage deals and mortgage refinancing, leading prospective buyers to look to digital solutions in greater numbers than ever before
This is not just a case of the pandemic causing an increase in the number of mortgage applications submitted digitally, although this was certainly something that occurred over the course of 2020; it is also an era in which home buyers were actually empowered thanks to the tools that are available to them online.
For example, consumers could learn how to find the best mortgage rate and even compare deals from major and minor lenders alike, rather than being corralled down a single path by just one financial organization or commission-driven brokerage.
The fall in mortgage rates
Speaking of looking for good rates on a mortgage, the pandemic’s economic impact also made life much better for home buyers, as rates fell to record lows in 2020, making it cheaper to get a long term mortgage deal than at any point in the past half-century.
While this is good news on the surface, in practice it creates something of a conundrum because plenty of areas of the country have seen demand for housing dramatically outstripping supply. For some buyers this has meant that even if they have been eligible for one of the many appealing mortgage deals on offer during the pandemic, they have been unable to capitalize on this because there is simply nothing suitable in their desired location to put an offer on.
The positives for first time buyers
A combination of the first two factors meant that the pandemic was something of a godsend for those who are just trying to get onto the housing ladder for the first time.
Being able to leverage digital tools to compare mortgage deals and also get hold of packages with very low rates of interest applied to them has afforded first time buyers an opportunity of a lifetime.
With homeownership levels declining in recent years, COVID-19 may have been the one event capable of reversing this trend and giving younger people in particular the means to overcome the barriers to entry which were previously keeping them out of the home ownership club.
The outlook for the future
It is very tricky to predict exactly how the mortgage industry will weather the inevitably economic fallout of the pandemic. The provision of extensive support packages for those industries that have been disrupted and outright derailed over the last year may not be enough to keep the demand for housing buoyant in the long term, and of course COVID-19 has caused plenty of people to rethink their priorities in terms of where and how they want to live.
The one certainty is that the digitization of the mortgage market is here to stay, and it is hard to imagine that people will go back to the old ways of finding the best deals, which means that lenders need to tilt their services even further towards the web if they want to remain relevant and court the next generation of customers.