States are slowly opening back up into an uncharted post-COVID19 closure world, but how does this affect the lending markets?
Some states have started to allow the gradual re-opening of businesses as stay-at-home orders begin to relax around the country. What effect will this have on mortgages, rates, and availability of lending to investors?
What We Know:
Here’s what we think is reasonable to expect as we return to our new version of “normal”:
As businesses start opening up, there will be an influx of people employed and able to make their rent and mortgage payments.
The majority of the traditional lenders left investors out to dry over concerns of rents being paid. Government officials haven’t helped the matter with proposals to postpone or forego rent payments. If tenant rents are not paid, how will investors react? Will they still be able to make their payments? Will it affect those with larger portfolios to a greater degree than those with smaller ones?
These serious (and unanswered) questions are the main reason we have little to no funding options at the moment.
The only way we put these concerns to rest is by people going back to work (if they’re able.) Feeling out the new “normal” flow of payments will help bring certainty to the lenders so that they can decide whether to open lending back up (at a limited pace and with tighter guidelines,) or keep it as-is (little to no options.)
The fate of the traditional lending world will hinge on payments: Those made by renters as they return to the workforce, and subsequently, those made by their landlords.
What You Can Do:
Be optimistic for more certainty over the coming weeks. As individual states’ economies reopen, let’s remain hopeful that jobs are still there, people want to go back to work, and that they are able to keep up with their payments.
Lastly, also let’s encourage government officials to stop putting out the idea that renters can “forgo” their rents. This helps no one currently holding a mortgage (unless you want votes.)
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