2020 has come upon the world with wrath like no other. Uncontrollable fires in California, and Australia, mass flooding, and now the worldwide pandemic Covid-19. We are facing challenges that have not been seen in a long time and this is having very real consequences on the way we live our every day lives, and how we will come out of this disease and back into the normal swing of things. There’s a major question regarding what will happen with Covid-19 and mortgages for the rest of year.
Current Situation
One thing that is clear is that the economy is suffering in light of Covid-19. With businesses closed and most of the world on pause, the mortgage market will inevitably go down but not for good reasons.
As people continue to lose their jobs due to forced business closures and lockdowns, many homeowners will either take their homes off the market or postpone their intentions to sell. Similarly, individuals who had plans to enter the real estate market may not be able to due to cutbacks in wages.
While governments have implemented stimulus packages to help their people, this will do little in the way of helping the mortgage market in the short term. Furthermore, restrictions are becoming more detailed. Particularly those regarding how a person may view a home for purchase, or how a seller may interact with the necessary professionals in order to sell their home.
As each of these things unfolds, momentum in the mortgage market will disappear. Housing prices are likely to fall but at varying amounts depending on location. As unemployment rapidly increases each day with new closures and restrictions, so too will the number of homes put up for sale due to the owner’s inability to repay their mortgage repayments in the current climate. This is likely to diminish consumer confidence in the mortgage market.
Covid-19 and Mortgages
It’s not all bad though. For those few buyers who are in stable, essential jobs, you may find that in the next few months are a good time for you to buy that new home. Lower home prices mean better deals for buyers.
For real estate investors, the declining economy will push rental prices lower—, meaning reduced profits. Currently, experts are hopeful that the mortgage market will rise again in 2021 once the pandemic is over and life returns back to normal. As of today, this is entirely possible. Unfortunately, tomorrow could hold another story, so only time will tell.
While there is no guarantee on what the mortgage market will bring throughout the rest of 2020 and into the future, one thing that is guaranteed is that everyone is in the same boat. Covid-19 is a global pandemic that has changed the ways in which every person lives. You are not in this alone. Contact a mortgage broker for more insight into the current situation.
