A study by LendingTree found 53% of homebuyers are more likely to buy a home over the next year due to the outbreak of COVID-19.
This is especially true for first-time buyers (73%) and millennials (66%). For all buyers planning to purchase a home over the next month, their top motivations were taking advantage of record-low mortgage rates (67%) and being able to save a large down payment due to reduced spending (32%). Another motivator was falling home prices (30%).
The report adds that among this group of prospective homebuyers, 44% play to buy a less expensive home, and the remaining 21% want a more expensive home.
LendingTree added that another 33% of responders said that although they haven’t yet participated in a virtual tour, they plan to do so. Also, three in 10 buyers said they’d buy a home without physically touring it in person.
Forty-four percent of homebuyers are worried about qualifying for a mortgage because of COVID-19. First-time buyers (58%) and millennials (52%) were the most concerned about qualifying.
Lenders in recent weeks have become less flexible on lending standards and are raising credit limits. JPMorgan Chase raised its credit score minimum to 700 and began requiring applicants to have enough savings for a 20% down payment. Wells Fargo is also shying away from riskier loans for borrowers who are unable to provide down payments of 20% and increased its FICO-score requirement to 680.
Redfin reveals that while nearly half of all Americans purchased homes last year with down payments of less 20%, tightened lending standards could provide roadblocks to homeownership.
The Mortgage Credit Availability Index fell 16% in March to its lowest level in five years, with Redfin saying banks are growing wary of borrowers requesting delayed payments in forbearance programs.
"Thousands of Americans who were priced out of the housing market due to the affordability crisis of the past decade might finally see homeownership as within reach, especially given historically-low mortgage rates. But unfortunately, they are now faced with another roadblock and may not be able to get a loan," Redfin Senior Economist Sheharyar Bokhari said. "Home equity is the primary way for Americans to build wealth. It's important that policymakers address this tightening of credit, as it has raised the barrier to homeownership."