COVID Mortgage Relief. How Has the Pandemic Affected the Mortgage Industry?

COVID Mortgage Relief. How Has the Pandemic Affected the Mortgage Industry?

The COVID-19 pandemic has impacted the housing market, bringing significant changes to the financial system and affecting buyers, homeowners, and renters alike.

In February of 2021, the Biden Administration extended the COVID-19 forbearance and foreclosure protections for homeowners through June 30. During this period 1 in 5 renters were late on rent payments while another 10 million homeowners were behind on mortgage payments.

Ths mortgage relief action benefitted approximately 2.7 million homeowners in the COVID forbearance and extended forbearance options for nearly 11 million government-backed mortgages nationwide.

At the same time, interest rates for single-family homes plummeted and prompted an increase in demand for real estate.

However, it also became harder for home buyers to qualify for a mortgage and there were longer waiting times to close out loans. 

Read on to learn more about how the COVID-19 pandemic has affected the mortgage industry. 

Mortgage Lending 

Mortgage lending has become difficult on both ends due to the economic uncertainty of the pandemic. Lenders have raised the bar on requirements for mortgages and refinancing resulting in higher minimum down payments and credit scores needed, and more thorough proof of having a stable income.  

This is during a time where unemployment rates in the U.S. are steadily decreasing, but remain higher than pre-pandemic levels. 

 

Home Refinancing

While receiving mortgage relief from the government helps, it is important to assess your situation and consider all of the available options. If you are looking to refinance your home, here are some ways to improve your chances:

  1. Increase the equity in your home by making additional payments each month. If you are able to achieve a minimum of 20 percent equity, you can avoid getting private mortgage insurance on the loan, resulting in a decreased mortgage rate. 
  2. Consolidate your debt. You need to consider your debt-to-income ratio, so it’s in your best interest to pay down what you owe.
  3. Lower your debt-to-income ratio. You can accomplish this by setting a monthly budget plan that will provide you with a better sense of your financial situation.

Mortgage Statistics for the Carolinas 

The Chicago Tribune chronicled how mortgage payments were impacted by COVID-19 in every state.

Some statistics on the housing market in North Carolina:

  • 12.3 percent of households reported falling behind on mortgage payments (51st highest in the US, 49 percent fewer did so in 2020) 
  • 25.5 percent of households with lost income fell behind on mortgage payments (33rd highest in the US, 4.9 percent fewer did so in 2020) 
  • 12.1 percent of unemployed respondents fell behind on mortgage (48th highest, 52.1 percent fewer did so in 2020)

Some statistics on the housing market in South Carolina:

  • 25.5 percent of households reported falling behind on mortgage payments: 25.5% (25th highest, 38 percent fewer did so in 2020) 
  • 23.6 percent of households with lost income fell behind on mortgage (39th highest, 50.1 percent fewer did so in 2020) 
  • 21 percent of unemployed respondents fell behind on mortgage (34th highest, 49.5 percent fewer did so in 2020) 

As homeowners and renters, you should prepare yourself for the following mortgage industry trends to take shape:

  • Mortgage rates rising in 2021 and beyond
  • People will steadily migrate to the suburbs
  • Home sales and prices to increase, but not at the same rate as 2020
  • Loan origination numbers won’t be as high as 2020
  • Commission revenue will drop

We Will Help You Find the Right Mortgage Rate

While the pandemic continues to shift the housing market, COVID mortgage relief will be needed by individuals and families of all sizes in the foreseeable future. It is essential to know what options are available and what it will take to make your homeownership goals a reality.  

We’ll help you get there. Contact us or give us a call (704) 412-9131 to discuss your purchase next refinance. We at Mecklenburg Mortgage are the experts and always go above and beyond for our clients.