After withstanding the longest government shutdown in U.S. history, the wheels of the economy are finally turning again. But has everything truly gone back to normal? What repercussions did the mortgage industry experience — or will experience — thanks to the standstill that left 800,000 people without pay and cost the U.S.economy an estimated $11 billion?
Here’s a quick rundown on how this may affect the mortgage industry and your lending business.
The most significant “ugly” is that 800,000 people were left without income for five weeks. In addition to the extreme financial stress that it put on these workers and their families causing late mortgage payments, the uncertainty about another possible shutdown caused new home purchases and loan applications to dip significantly.
What’s more, small businesses that depended on the buying power of these government workers also felt the loss of revenue. The result is that even more potential home buyers holding off on applying for mortgages.
The shutdown also slowed down some essential verification and federal loan processing departments. Although the shutdown is now over, delays with the I.R.S and FHA loan approval may continue in the coming weeks as they play catch up.
The housing market has also taken a hit; most notably HUD homes. Running on less than 4% than the normal staff, the U.S. Housing and Urban Development found it difficult to manage the HUD home demand. As a result, there was a decline in HUD home sales.
Officials predict that the decline in HUD home sales can make the entire housing market sluggish, but that remains to be seen.
With buyers already feeling less confident, you can see how there’s a potential for a downward spiral.
Yes! There is still good news! In an effort to stimulate economic growth and regain the confidence of all buyers, the Federal Reserve has lowered rates. As you may recall, rates were slowly on the rise these past months and it made some potential home buyers hesitant.
But with interest rates on a downward trend and a housing market less competitive, it actually makes for a buyers market! What’s more, with so many variables on shaky ground, Americans are looking for stability –and that stability often comes from home ownership.
One thing is for sure: the industry is changing and not just from the government shutdown. Digitization is revolutionizing the mortgage industry, and in comparison, the government shutdown is but a blip. Yes, things may have slowed down, but it’s not permanent. And LenderHomePage is here, with ears to the ground, and feet on the pavement, supporting your lending business now and in the future.