With the U.S. at the epicenter of the coronavirus (COVID-19) pandemic, a once-hurried society has been brought to a halt and cautiously looks for a path forward. Schools and businesses have closed as friends and neighbors observe strict social distancing measures.

As a stark contrast to the optimistic outlook on housing that ushered in 2020, COVID-19 has rapidly infected the market. As homebuyers gathered food and shored up financial reserves, interest in buying or selling a home steadily declined.

According to a flash survey conducted on March 16 by the National Association of Realtors (NAR), 37% of realtors had witnessed falling interest in home buying.  The number rose to 41% for realtors in areas where COVID-19 cases had been reported. Sellers got the jitters as well. Twenty-five percent of respondents had experienced declines in the number of home listings. In areas where COVID-19 cases had been confirmed, 20% of realtors reported that homes were being pulled off the market at a time when listings are traditionally on the rise. How long the dry spell will last—and if it will worsen—depends largely on current social distancing measures.

In several states, government mandates have closed nonessential retailers and businesses, causing a swarm of layoffs. By some estimations, jobless claims may have reached 5 million by the end of April, and Goldman Sachs now predicts steep first and second quarter declines in GDP growth before revitalization begins again in the third quarter.

We know a third of Americans would need to borrow money to cover a $1,000 emergency expense. According to a Bankrate survey, lack of employment for even a few weeks has already negatively impacted household finances, reducing the number of potential home buyers.

While these factors could put the brakes on a robust housing market, most realtors are still seeing business as usual. Record low mortgage rates may get the credit here, and with future mortgage rates predicted to dive as low as 2.75% by some experts, the long-term outlook is still likely to be bright for the housing market.

A digital-first mortgage lending experience

Although economic turmoil brings uncertainty for financial institutions and consumers, credit unions are often at their strongest in times like these. Credit unions leverage innovation and determination and take extraordinary measures to serve local communities. A digital-first approach is a requirement to stay relevant and competitive.

Doubling down on technology gives lenders the ability to meet borrowers in a virtual economy. Mobile-ready and responsive applications and the ability to sign documents electronically and quickly upload required documentation becomes not just about convenience, but about safety. Community mortgage providers can fight the pandemic effects on the housing market by establishing a lending approach that connects borrowers and lenders virtually.

Moving forward with mortgage

Finastra’s recent e-book, Moving forward with mortgage, takes a deeper dive into the COVID-19 impact on the housing marketing, including mortgage refinancing and relief and what credit unions can do to meet member mortgage needs. Download the e-book now, and to learn more about adopting a digital-first mortgage lending approach, contact Finastra.

Dan Putney is regional managing director of sales at Finastra.