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Strong Anticipated Home Loan Amounts In 2019 Powered By Limited Housing Stock & Low Interest Rates

April 17, 2020 Melissa Ledesma

After a tumultuous 2018, prospective buyers returned to the purchase market in 2019. Due to increased buyer demand and housing inventory shortages, anticipated loan purchase amounts in the West dominated at $243,959.05 according to the 2019 Purchase Mortgage Loan Amount Snapshot Report by DMS Consumer Finance.  

Housing Shortages And Rising Demand Accelerate Home Price Appreciation

Shutterstock_1043134735 House model in home insurance broker agent ‘s hand or in salesman person. Real estate agent offer house, property insurance and security, affordable housing concepts

Pent up demand among purchase borrowers helped drive existing-home sales to exceed $5.34 million by the end of 2019, according to the National Association of Realtors (NAR). Aggressive mortgage interest rate increases in 2018 prevented many interested borrowers from making the jump into the purchase market. 2019 was finally a year of relief. Prospective buyers who had remained on the fence for more than a year were provided overdue reprieve as interest rates plummeted month to month, nearing three-year lows in August and remaining below 4.0% in Q4. 

Although attractive interest rates enticed more buyers to enter the market, housing supply was not sufficient to satisfy the heightened demand of hopeful homeowners searching for residential properties. According to NAR’s housing shortage tracker, California, Oregon, Washington and Nevada each had counties experiencing some level of mid-level to high housing inventory deficiencies, with the greatest housing stock limitations in regions of California. Housing shortages motivated prospective borrowers to make offers and move quickly, sometimes increasing their bid prices to beat the competition. By November 2019, properties in California’s metro markets of Modesto, Vallejo-Fairfield, Fresno, San Francisco, Yuba City, Stockton-Lodi and Sacramento were selling an average of 21 days faster than typical properties in the U.S. Low interest rates coupled with limited housing inventory created the perfect combination to drive strong mortgage loan purchase amounts. Download the 2019 Purchase Mortgage Loan Amount Snapshot Report by DMS Consumer Finance for additional insight on 2019 purchase loan amount trends.

What Spurred Mortgage Market Changes In The West?

According to NAR, the West led all regions in home prices from 2013 to 2019. In 2019, the average existing home price among states in the western region of the U.S. reached $400,000. Home prices in the West had been steadily growing since the Great Recession. Over the last decade, the West experienced home price gains of 88.6%, dramatically outpacing all other U.S. regions. Plunging mortgage interest rates coupled with low unemployment helped to increase affordability in the West. According to NAR data, by July 2019, the West had a year-over-year (YOY) affordability gain of 13.8%, the second greatest among all U.S. regions. As a result of a series of motivating economic factors, the Pacific division, inclusive of Alaska, California, Hawaii, Oregon and Washington, led the western region for average anticipated purchase loan amount in 2019, according to the 2019 Purchase Mortgage Loan Amount Snapshot Report. The Pacific region outperformed the national average anticipated home loan amount by 32%.

How Will The Mortgage Market Respond To COVID-19?

Shutterstock_1687919269 man hand house model in the screen background

The effects of COVID-19 on the future of the home purchase market are still to be determined. Irrespective of the health crisis, mortgage marketers know that housing supply, mortgage interest rates, affordability, access to financing and employment will always be strong indicators to forecast market performance. Other real estate market trends that could impact the purchase market throughout 2020 include:

  • In early April, NAR found that 57% of sellers plan to delay putting their homes on the market as a result of the coronavirus.
  • 63% of buyers are expecting some level of decline in home prices.
  • 60% of prospective buyers will delay buying homes by a few months.
  • Mortgage credit supply is down 16%, currently at its lowest point since July 2015.
  • Major lenders such as Chase, Wells Fargo and U.S. Bank have increased their minimum credit score requirements by 100 points.

The economic and societal changes that have resulted from COVID-19 may have affected many areas of the real estate business, but this is not the time for marketers to minimize marketing efforts and go dark. More than ever, mortgage marketers need to maintain a relevant presence.

Digital marketing strategies can empower mortgage marketers to increase connections with prospective buyers and nurture relationships. Capitalizing on the increased number of consumers who will be spending time online, mortgage marketers can deploy pertinent content to connect with prospective borrowers through social media and email marketing. Content focused on a buyer’s long-term needs, such as best practices for improving and maintaining strong credit scores and down-payment savings tips are likely to be the most impactful during this time. Marketers should consider the next few months as an extended period to focus on growing consumer relationships in the hope of converting future business. 

Download the 2019 Purchase Mortgage Loan Amount Snapshot Report Today

The 2019 Purchase Mortgage Loan Amount Snapshot Report, published by DMS Consumer Finance™, highlights purchase mortgage market trends for the period of January 2019-December 2019. The detailed report uses expert insight to identify loan amounts by region, division and month and astutely predicts what mortgage marketers could expect for the future of the mortgage industry. 

DMS Consumer Finance™ manages an extensive portfolio of owned-and-operated, consumer finance focused websites that attract and educate high-intent borrowers. Using a combination of rich content and borrower resources, DMS Consumer Finance helps consumers connect with the lenders that best support their financial objectives.

Contact DMS

About the Author

Melissa Ledesma

An innovative problem solver by nature, Melissa Ledesma is both experienced and passionate about the digital marketing industry. She has held a number of high-level positions within the real estate, mortgage, entertainment and digital advertising industries, including Director of PR and Business Development at NJ Lenders Corp. and Director of Communications & Government Affairs at Eastern Bergen County Board of Realtors. As Director of Content & Communications at Digital Media Solutions (DMS), Melissa demonstrates a strategic, creative and tactical approach when handling the thought leadership programs and marketing and communications efforts for DMS and its family of brands. She manages all conferences, sponsorships and event execution and plays a pivotal role in the creation of written, digital and video content for all campaigns. Melissa has consistently positioned the team at DMS as experts in performance marketing across multiple industries.

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