MReport January 2021

TheMReport — News and strategies for the evolving mortgage marketplace.

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34 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Staying Strong Government stimulus helped people buy homes in 2020. T he COVID-19 pan- demic made 2020 a difficult year for many industries, but the housing market has been surprisingly resilient. 40 million Americans lost their jobs due to COVID-19 and the economic turmoil it has caused, and about half of them still had to rely on unemploy- ment benefits as of November. In spite of the slow economic recovery, some homebuyers put down larger down payments on homes in 2020. Surprisingly, the percentage of mortgage applica- tions on LendingTree's platform that had a down payment of 20% or greater increased in 2020. In 2019, 38% of mortgage ap- plications on LendingTree had a down payment of at least 20%, which decreased only slightly From January through March of 2020 to 36%. From April through June of this year, this increased to 49% of borrowers who put down more than 20%. In July through October 2020, the share of borrowers who gave down payments of 20% or more was still high at 48%. This data is consistent across the United States' 50 largest cit- ies, with Buffalo, New York hav- ing the highest increase. Those who made down payments over 20% from January 2019 to March 2020 made up 47% of mortgage applications. This rose to 70% from April through October of 2020. Since COVID-19 upended American jobs in March, the federal government has pumped $3.5 trillion into the economy, including $2.6 trillion in spending and $900 billion in tax relief. Tendayi Kapfidze, LendingTree's VP, Chief Economist, says in his report that this fiscal stimulus may have helped contribute to the housing and mortgage indus- try's success. Extremely low mortgage rates had a huge impact on the hous- ing market's boom in 2020, and Kapfidze explains that "mortgage rates are being driven lower by the Federal Reserve's monetary stimulus through its aggressive bond-buying program." However, fiscal stimulus from the federal government has also provided a boost to the housing market. The LendingTree report states that "between 25% to 60% of stimulus payments were used to pay down debt or add to house- hold savings," which may have helped Americans lower their debts and increase their chances of being able to purchase a home. Data shows that there has been "a decline of more than $130 billion in credit card debt," since the beginning of 2020. Stimulus checks may have been a helpful resource for Americans to help achieve this decline in debt. COVID-19 has also driven more Americans to save—setting aside "$1.35 trillion more than they would have saved in a nor- mal year." This also was likely a factor that enabled homebuyers to afford larger down payments. The LendingTree report notes, however, that saving money and paying off debt has not been a possibility for many Americans. Lower-income households con- tinue to struggle with paying for basic daily expenses and housing.

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