The coronavirus pandemic has shut down countless small businesses, laid off millions of Americans, and tanked the economy into a recession.
Strangely enough, however, this unprecedented moment in history can also be characterized by a red-hot real estate market. With mortgage interest rates at all-time lows throughout the pandemic, homebuyers have come out in droves.
According to the Mortgage Bankers Association, mortgage refinances are up 84% year-over-year, while mortgage applications have increased 22% compared to last year.
LendEDU decided to take a closer look at this unexpected trend by surveying 1,000 adult American homeowners that currently have an outstanding mortgage through a private lender.
Among many interesting trends, we found that new homeowners are regretting their decision to buy a house during the pandemic, while 26% have refinanced their mortgage during the pandemic, and 54% have seen incorrect negative credit marks for something like a missed payment despite agreeing to temporary forbearance.
Click here to jump to the full survey results.
Note: If you would like a raw file of any data found below, or if you would like to see a specific breakdown (by age, state, gender, etc.), please email me at [email protected]
Observations & Analysis
All data is based on an online survey of 1,000 adult Americans commissioned by LendEDU and conducted by research firm Pollfish. All respondents were current homeowners that had an outstanding mortgage through a private lender. The survey was conducted on August 21, 2020. For some questions, the answer percentages may not add up to 100% exactly due to rounding.
Mainly Citing Financial Struggles, 55% of Homeowners Regret Taking Out a Mortgage During the Pandemic
94% of our respondents became homeowners with the help of a mortgage before the coronavirus pandemic began impacting the U.S.(before March 2020), while 6% became homeowners with the help of a mortgage during the pandemic (March 2020 to now).
Amongst the latter, a combined 72% cited the coronavirus pandemic as the reason they decided to take out a mortgage to become homeowners, with many specifically attributing the current low-interest-rate lending environment.
As previously mentioned in the introduction, all-time low mortgage interest rates have led to an overflow of mortgage applications during the pandemic. Our survey data confirms this.
However, our survey data also found that the majority of these new homeowners are now regretting their decision as the pandemic-induced recession makes mortgage payments tougher to swallow.
A combined 55% of new homeowners regret their decision to buy a house with a mortgage during the pandemic, with 30% attributing financial reasons as the source of their regret.
Between layoffs, reduced hours, and shuddered businesses, it’s become tougher for Americans to make ends meet during the coronavirus pandemic. The financial challenge only becomes more difficult when a monthly mortgage payment, which averages around $1,030 nationwide, is suddenly added to the equation.
We touch on more of these financial struggles later in the survey.
Over a Quarter of Homeowners Have Refinanced Their Mortgage During the Pandemic
Seizing the low-interest rate opportunities spurred on by the coronavirus pandemic, a good number of homeowners are refinancing their mortgages.
LendEDU found 26% of all poll participants have refinanced their home loan during the pandemic, while 73% have not, and 1% opted not to say.
Amongst new homeowners specifically, 41% have already refinanced their mortgage to capitalize on the coronavirus interest rates compared to 25% of pre-coronavirus homeowners that have also utilized a mortgage refinance during the pandemic.
And, nearly every single homeowner that has refinanced their mortgage during the pandemic has been able to secure a more favorable interest rate.
Mortgage refinances are up 84% year-over-year, and it’s easy to understand why when you take a look at current rates and the percentage of homeowners that are getting lower interest rates than what they had before refinancing.
If your finances are right and your current home loan rate is higher than today’s market standard, it appears to be an ideal time to consider refinancing your mortgage.
When LendEDU asked those homeowners who haven’t refinanced their mortgage during the pandemic why they haven’t done so, 44% said they never considered it, 23% wanted to keep building credit, 8% did not want an appraiser in their home or couldn’t find one, 6% applied but haven’t heard back yet, and 4% applied but were denied.
This article does a good job breaking down the challenges of refinancing during the coronavirus pandemic, including the lack of working appraisers because of social-distancing guidelines and the backlog of mortgage refinance applications.
With Close to Half of Homeowners Struggling to Repay Their Mortgage During the Pandemic, Forbearance Agreements are Common
When we asked all of our home-owning respondents if they have struggled to make their monthly mortgage payments during the coronavirus pandemic, a combined 41% indicated they are experiencing difficulties.
17% of homeowners attributed them or their co-borrower getting laid off during the pandemic as the reason they are struggling to make their monthly mortgage payments, 20% cited general financial struggles brought on by the recession, and 4% pointed towards other reasons.
While many homeowners are struggling to keep up with their home loan payments, new homeowners that took out a mortgage during the pandemic are especially having a tough go of it as 23% of this cohort cited a layoff as the reason they are struggling to keep up with the monthly financial obligation.
Not surprisingly, our survey found the struggles to make monthly mortgage payments has led to quite a few pandemic forbearance agreements between lenders and borrowers.
Mortgage lenders have demonstrated flexibility and an understanding of the current financial circumstances by agreeing to temporary forbearance periods or reduced monthly payment requirements.
It appears this is especially true for those who took out a mortgage during the pandemic, as our survey found 18% have been granted pandemic forbearance, while 25% have agreed to a reduced monthly minimum mortgage payment.
When respondents that were granted temporary pandemic forbearance were asked how their mortgage debts will eventually be repaid, 62% said through a loan modification, while 19% will be put on a payment plan, and 9% will have to make a lump-sum payment.
And when homeowners were questioned on the amount of time they have left on the pandemic agreement they made with their mortgage lenders, here’s what we found…
As the coronavirus pandemic and the resulting financial struggles continue, it will be interesting to see what mortgage lenders do about the temporary forbearance or reduced payment agreements they made with many homeowners when time begins to run out.
Will they extend the agreements or begin cracking down on borrowers that owe mortgage debt payments?
Either way, we found the increased number of these mortgage agreements has led to more homeowners getting incorrect negative marks on their credit reports for missed or insufficient payments.
Over Half of Homeowners Have Had Incorrect Negative Credit Marks Due to Pandemic Agreements With Mortgage Lenders
A recent LendEDU analysis of consumer finance complaints found a massive year-over-year uptick in the number of credit reporting complaints during the coronavirus pandemic.
It seems that many consumers are entering into forbearance or reduced monthly payment agreements with their lenders only to see their credit score improperly get dinged for a missed or insufficient payment.
Our survey found this is happening quite often with mortgage borrowers that have come to such agreements with their mortgage lenders.
More than half of homeowners that have agreed to some sort of agreement with their mortgage lender have had their credit health be negatively impacted by an incorrect mark like a missed payment despite being placed in pandemic forbearance.
While this is never a welcomed experience, we did find that 60% of respondents have already resolved the credit dispute, while 10% are currently in contact with either their mortgage lender or credit bureau to resolve the issue. 29% indicated nothing has been resolved yet.
If something similar has happened to you for a mortgage or any other financial product, the best thing to do is get in contact with both your lender and a credit bureau to solve the issue as quickly as possible. Additionally, signing for a credit-monitoring service can help you stay on top of any sudden changes to your credit score.
Full Survey Results
All data is based on an online survey of 1,000 adult Americans commissioned by LendEDU and conducted by research firm Pollfish. All respondents were current homeowners that have an outstanding mortgage through a private lender. The survey was conducted on August 21, 2020. For some questions, the answer percentages may not add up to 100% exactly due to rounding.
Note: If you would like a raw file of any data found below, or if you would like to see a specific breakdown (by age, state, gender, etc.), please email me at [email protected]
1. Which of the following best describes your current homeownership situation?
- 94% of respondents answered, “I became a homeowner with the help of a mortgage before the coronavirus pandemic (before March 2020).”
- 6% of respondents answered, “I became a homeowner with the help of a mortgage during the coronavirus pandemic (March 2020 to now).”
2. (Asked only to those who became a homeowner during the coronavirus pandemic) Did the coronavirus pandemic play any role in you becoming a homeowner with the help of a mortgage?
- 54% of respondents answered, “Yes, I wanted to take advantage of the low mortgage interest rates.”
- 15% of respondents answered, “Yes, I wanted to move out of a location getting hit hard by the coronavirus pandemic (i.e. New York City).”
- 3% of respondents answered, “Yes, other.”
- 26% of respondents answered, “No, the coronavirus pandemic had no impact on me becoming a homeowner.”
- 2% of respondents answered, “Not sure/I’d rather not say.”
3. (Asked only to those who became a homeowner during the coronavirus pandemic) Do you regret becoming a homeowner during the coronavirus pandemic?
- 30% of respondents answered, “Yes, I should have waited for financial reasons.”
- 10% of respondents answered, “Yes, I should have waited for social/life reasons.”
- 7% of respondents answered, “Yes, I was not prepared for homeownership.”
- 8% of respondents answered, “Yes, other.”
- 43% of respondents answered, “No, I made the right decision to become a homeowner during the coronavirus pandemic.”
- 3% of respondents answered, “Not sure/I’d rather not say.”
4. Have you refinanced your mortgage during the coronavirus pandemic?
- 26% of respondents answered, “Yes”
- 73% of respondents answered, “No”
- 1% of respondents answered, “I’d rather not say.”
5. (Asked only to those who answered “Yes” to Q4) Did you receive a lower interest rate after refinancing your mortgage during the coronavirus pandemic?
- 90% of respondents answered, “Yes”
- 9% of respondents answered, “No”
- 1% of respondents answered, “I’d rather not say.”
6. (Asked only to those who answered “No” to Q4) Why have you not refinanced your mortgage during the coronavirus pandemic?
- 8% of respondents answered, “I did not want an appraiser in my home/I haven’t been able to find an appraiser.”
- 4% of respondents answered, “I applied to refinance my mortgage but was denied.”
- 6% of respondents answered, “I applied to refinance my mortgage but haven’t heard anything back yet.”
- 23% of respondents answered, “I want to continue paying my current mortgage to build credit.”
- 44% of respondents answered, “I never considered it.”
- 14% of respondents answered, “Other”
- 2% of respondents answered, “Not sure/I’d rather not say.”
7. Have you struggled to repay your mortgage each month since the start of the coronavirus pandemic?
- 17% of respondents answered, “Yes, me or my partner/co-borrower has been laid off due to the coronavirus pandemic and finances have gotten tight.”
- 20% of respondents answered, “Yes, I am struggling to repay my mortgage because of the general financial struggles/recession brought on by the coronavirus pandemic.”
- 4% of respondents answered, “Yes, other.”
- 58% of respondents answered, “No, I have not had any struggles in repaying my mortgage since the start of the coronavirus pandemic.”
- 2% of respondents answered, “Not sure/I’d rather not say.”
8. Since the start of the coronavirus pandemic, have you entered into any type of pandemic forbearance or reduced minimum payment agreement with your mortgage lender?
- 16% of respondents answered, “Yes, we agreed on a temporary pandemic forbearance period.”
- 11% of respondents answered, “Yes, we agreed on a reduced monthly minimum payment.”
- 5% of respondents answered, “Yes, something similar.”
- 67% of respondents answered, “No”
- 1% of respondents answered, “I’d rather not say.”
9. (Asked only to those who agreed on a temporary pandemic forbearance period) Has your mortgage lender indicated how you will have to repay your “skipped” payments after the pandemic forbearance period ends?
- 62% of respondents answered, “Yes, it will be done through a loan modification that will reduce the interest rate or add unpaid months to the end of the mortgage term.”
- 19% of respondents answered, “Yes, it will be done through a payment plan that will repay the “skipped” payments over time.”
- 9% of respondents answered, “Yes, it will be done through a lump -sum payment.”
- 10% of respondents answered, “No, not yet.”
- 0% of respondents answered, “Not sure/I’d rather not say.”
10. (Asked only to those who answered with a “Yes” response to Q8) Since entering into pandemic forbearance or a reduced minimum payment agreement with your mortgage lender, have you seen any negative marks on your credit report for something like a missed or insufficient payment despite the agreement?
- 54% of respondents answered, “Yes, my credit score has taken a hit due to a missed or insufficient payment despite the agreement.”
- 40% of respondents answered, “No, I haven’t noticed anything yet.”
- 6% of respondents answered, “Not sure/I’d rather not say.”
11. (Asked only to those who answered “Yes” response to Q10) Have you resolved the incorrect negative credit mark with either your mortgage lender or credit bureau?
- 60% of respondents answered, “Yes, it has been resolved.”
- 29% of respondents answered, “No, nothing has been resolved yet.”
- 10% of respondents answered, “Not yet, but I am in contact with either or both.”
- 2% of respondents answered, “I’d rather not say.”
12. (Asked only to those who answered with a “Yes” response to Q8) How much longer is the pandemic forbearance or reduced minimum payment agreement going to last according to your mortgage lender?
- 22% of respondents answered, “It ends within the next 30 days.”
- 30% of respondents answered, “31 – 60 days”
- 27% of respondents answered, “61 – 90 days”
- 14% of respondents answered, “91 days or more”
- 6% of respondents answered, “Not sure/I’d rather not say.”
13. (Asked only to those who answered with “No” or “I’d rather not say” to Q8) Did you try communicating with your mortgage lender to enter into pandemic forbearance or a reduced minimum payment agreement?
- 2% of respondents answered, “Yes, they denied the request.”
- 3% of respondents answered, “Yes, I haven’t heard back from them.”
- 2% of respondents answered, “Yes, other.”
- 92% of respondents answered, “No”
- 2% of respondents answered, “I’d rather not say.”
Keys to Buying a House With a Mortgage
Buying a home with the help of a mortgage is not only a massive life decision, but also a financial decision of great consequence. Because of this, you need to ensure that you do your research and know your options before making a final decision.
LendEDU provides a few tips below on how to prepare yourself for taking out a mortgage and becoming a homeowner.
Set a Budget
First things first, you need to establish a budget for yourself so that you don’t end up in financial ruin because you can’t afford your monthly mortgage payments.
LendEDU’s mortgage calculator can help you estimate your monthly mortgage payments depending on the loan size, interest rate, and term length.
Compare All of Your Options
When it comes to taking out a mortgage, nothing is more important than comparing all of your home loan options and offers from different mortgage lenders.
For example, you must compare mortgage rates and also check out options from online mortgage lenders in addition to traditional bank lenders.
And if you are a veteran, you should look into VA lenders and current VA mortgage interest rates to see how those offers stack up against mortgages from traditional lenders.
Weigh Refinancing Your Mortgage in the Future
Once you have settled into your new home and demonstrated an ability to make your monthly mortgage payments, it never hurts to consider a mortgage refinance to see if it’s possible to lower your mortgage rate.
LendEDU has a mortgage refinance calculator that may help give you a better idea as to how much money you could possibly save by refinancing your home loan.
Methodology
All data found within this report is based on a survey commissioned by LendEDU and conducted online by survey platform Pollfish. In total, 1,000 adult Americans were surveyed. All respondents were current homeowners that have an outstanding mortgage through a private lender. The appropriate respondents were found via Pollfish’s age filtering feature, in addition to a screener question. This survey was conducted on August 21, 2020. All respondents were asked to answer all questions truthfully and to the best of their abilities.
See more of LendEDU’s Research here.