Purchase Mortgages Are Gaining Steam

June 21,2021

It’s not a refinance market anymore. In fact, credit unions can look forward to getting back into the purchase-mortgage game as the rest of this spring and summer transpire. Here’s why:

  • Home-selling sentiment is experiencing positive momentum, nearly reaching pre-pandemic levels. This indicates not only a strong seller’s market, but an increasing willingness for many homeowners to list their house on the market according to the most recent Fannie Mae Home Purchase Sentiment Index. This anticipated willingness-to-sell trend, combined with major economic growth and a decrease in business/societal pandemic restrictions, will most likely fuel home purchases as housing supply tries to catch up with overwhelming buyer demand.


  • Migration patterns and moving activity are about to experience an uptick. A recent report by Zillow found approximately 2.5 million homeowners say they're more likely to move and sell their home this year — with many migrating out of region or out of state. “Life and financial uncertainty are among the top reasons homeowners have not listed their home for-sale during the pandemic,” the report says. The COVID-19 vaccine is changing that.


  • Most young owners/buyers say owning a home is a good investment compared to investing in the stock market. According to a recent blog post by the National Association of Home Builders (which spotlights a Federal Reserve survey), 90 percent of “young respondents” have a strong preference for buying a primary residence rather than investing in financial markets. Most survey respondents cited “desired living environment,” “stability,” “housing prices less volatile,” and future “higher house prices” as their primary reasons.


  • As work-from-home becomes more than just an experiment for homeowners who crave this lifestyle, first-time homebuyers want to join the club. Whether it’s only a couple of days or the entire week, Americans have “redefined” the purpose of homeownership. The majority of current homeowners say that spending more time at home due to the pandemic has ushered in an “at home” emphasis in their lives as they look to utilize space differently and upgrade kitchens, home offices, bathrooms, outdoor features, as well as jump on top of maintenance and repairs. This trend continues to spark interest in would-be owners on the outside who want in.


  • While home inventory remains tight, select metro and suburban areas are starting to outperform others in residential construction. Newly built communities and custom-built residences in many cities are ramping up again, according to a recent analysis by Realtor.com. U.S. builders applied for 14 percent more permits this year than last year. The more new homes coming online, the higher the “existing” housing stock rises going into the future.


  • A combination of continued federal financial relief and private-sector technological efficiencies will continue cushioning the entire real estate market. It takes several reasons for a purchase market to gain steam. But oftentimes overlooked is the continuing forbearance relief that one government agency is proposing for nearly 2.5 million homeowners who are still enrolled in some type of forbearance program coming out of the COVID-19 crisis point. Such actions can help ease the real estate market’s concerns as those buying, selling, and working in it wait for the economy to fully recover (not to mention the new conveniences and processes injected into the industry coming out of 2020 that only enhanced the experiences of buyers and sellers).


  • Interest rates on mortgages are still low enough for many first-time buyers to realize their dreams. Historically speaking, average mortgage rates are very low today. No one can tell their future, but for right now this creates the perfect opportunity for both first-time and repeat buyers to jump at their chance at choosing a new home.
by CU Members

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