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4 Mortgage Market Trends to Watch in 2021

The record-low interest rates the mortgage industry experienced over the past year played a major role in its success despite the unprecedented circumstances. Due to the plunging interest rates in 2020, the mortgage industry experienced shockingly high purchase and refinancing volumes.

But 2020 is over, and based on mortgage leaders’ predictions, the trends that drove the industry last year might be too. Let’s take a look at the 2021 mortgage trends that are forecasted to drive the market this year.

Origination Volumes will Continue to Soar

At the recent ICE Mortgage Technology Experience 21 conference, Robert Broeksmit, President and CEO of the Mortgage Bankers Association (MBA), provided some key predictions. One of these predictions revolved around origination volumes. He explained that the MBA estimates that 2021 will bring upwards of $3 trillion in mortgage originations. This number is well above pre-pandemic levels and is the second-highest total since 2005.

Broeksmit announced that the MBA expects 2021 to bring an all-time record for purchase volumes. And what’s more, the association predicts that this volume won’t stop growing in 2021, but will, instead, continue to soar for years to come.

Refinance Volumes will Fall

Despite the upbeat forecasting for origination volumes, the refinance volumes that soared in 2020 are not predicted to continue down the same path in 2021.

Refinance applications are already slowing down, and according to the MBA, they will continue to fall. The main reason for this predicted decline? Interest rates.

Because of rising interest rates, the MBA expects refinancing volume to decrease to $1.191 trillion in 2021, when it was at $2.149 trillion in 2020. The association also forecasted that this number will continue to drop in 2022—potentially down to $573 billion.

Interest Rates will Rise

The cat’s already out of the bag—interest rates are predicted to rise in 2021. In fact, U.S. mortgage interest rates have already increased for seven weeks in a row. And according to Freddie Mac’s April 1, 2021 survey, the average 30-year fixed mortgage rate is 3.18%–the highest since June of last year. Just in January of 2021, the rate sat at 2.65%–an incredibly low rate that resulted in a high refinancing volume.

With that low rate out of the picture, many homeowners will turn their heads from refinancing their mortgages as doing so will no longer benefit them financially. According to Black Knight, when mortgage interest rates exceeded 3%, the number of homeowners eligible to refinance dropped from 18 million to 12.9 million within a month. As rates continue to rise, the number of homeowners eligible to refinance will continue to drop simultaneously, and industry leaders do in fact predict that interest rates will continue to rise.

The MBA’s recent forecast disclosed their prediction that the average 30-year fixed mortgage loan rate will rise to 3.6% by the end of the year. That would be an increase of over 0.4% from Freddie Mac’s industry survey conducted on April 1.

Technology will Take Center Stage

While interest rates are predicted to rise and refinance volumes are predicted to fall, market leaders still forecast another successful year for the industry in 2021. That being said, ensuring that your organization is capable of keeping up with the thriving mortgage market is critical to your success this year.

So, how can you ensure your success? That’s easy! Technology.

Taking advantage of automation to streamline the mortgage experience was already a key business driver before the global pandemic struck. But with record-breaking mortgage originations predicted to drive the industry this year, it’s more of a requirement. That’s why the adoption of mortgage technology is a major trend for 2021. The time to ensure your systems and processes are ready to take on another booming year is now.

State-of-the-art mortgage technology does more than accelerate your processes. It provides an accessible platform for tracking everything from applications to audits and offers reporting you can use to keep everyone in the loop, from investors to remote team members. It even acts as a solution to your ongoing problem of maintaining the right level of capacity for fluctuating volumes.

Here are just a few examples:

  • MetaStor®: MetaSource’s mortgage document management platform, MetaStor, is a robust cloud repository. It allows lenders and servicers to automate loan processing with a platform that indexes and automatically routes documents through workflow queues.
  • Symmetri: As an automated mortgage origination software that links back-office loan systems and borrower facing platforms for loan origination, Symmetri accelerates the entire origination process. With purchase origination volumes expected to rise this year, such a solution is key to your success.
  • MetaWorx®: MetaSource’s MetaWorx is a powerful audit workflow automation platform that increases investors’ speed to purchase and streamlines the whole loan purchase review process. It enables correspondent investors to take advantage of the abundance of opportunities available.
  • QLink: QLink is a web-based mortgage compliance and quality control software that allows you to track and manage metrics from the cloud. It streamlines the mortgage quality control process and ensures compliance, regardless of volumes.

Prepare Now for An Active Mortgage Industry in 2021

The mortgage industry thrived in 2020 and 2021 is expected to continue the trend.

As the industry braces for yet another busy year, with trends like increasing purchase origination volumes, the right technology can enable you to do more than just keep up. From loan origination to quality control audits, digital solutions can expedite processes and maintain digital records for a robust infrastructure that lets you thrive as the industry does.

To learn more about the right technology for your team and how it can help you prepare for the predicted 2021 mortgage market trends, contact MetaSource’s team of industry experts.

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