According to the U.S. Department of Veterans Affairs, Veteran homebuyers and the VA loan program had their biggest year ever in 2020. Turns out an encore might be on the horizon.

Plus, VA officials this week announced expanded benefits that open the door for some National Guard service members to receive VA home loan benefits (details below).

Nearly two-thirds of Veterans say 2021 will be a good time to buy, and about a third plan to purchase this year, according to a new national survey of more than 850 Veterans and service members.

The long-term homebuying outlook is just as rosy: A whopping 58% of Veterans said they plan to buy a home in the next five years. That optimism also extends to personal pocketbooks. The survey found most Veterans expect their own financial situations to improve this year.

Riding a wave of rock-bottom mortgage rates, VA backed an all-time record 1.2 million loans in Fiscal Year 2020. Younger Veterans and service members seized on the opportunity, with Millennial and Generation Z Veterans accounting for half of all VA purchase loans in FY20.

The survey also identified a disconnect between what Veterans and service members say they know about mortgages and homebuying and what it takes to get a loan.

Across all age ranges, Veterans on average think they'll need about a 25% down payment to secure a home loan. But most Veterans can purchase with $0 down because of their VA loan benefit. Even conventional mortgages are often accessible with just a 5% down payment.

Just 3% of Veterans said it was possible to purchase a home without a down payment. These misperceptions can keep some Veterans from exploring a home purchase when it's actually within reach.

And according to the new benefits expansion update, certain members of the U.S. Army National Guard or the U.S. Air National Guard are now eligible for VA home loan benefits.

To be eligible:

• The member must have performed not less than 90 cumulative days of full-time National Guard duty, of which, at least 30 of those days must have been consecutive.

• Full-time National Guard duty includes training or other duty of the member's status.
• Full-time national guard duty does not include inactive duty, such as monthly drills. It also does not include basic or initial training.

Ask a Movement Loan Officer for more information about the National Guard VA benefits or other benefits under the Movement Military VA mortgage programs.

The purchase mortgage market is back on top

According to HousingWire, the share of refinances in mortgage origination volume dipped below 50% for the first time in 15 months in March. With interest rates continuing to tick up, the purchase mortgage market is where most lenders will focus operations over the next year.

"Recent – and sharp – upward movements in interest rates have shifted the mortgage originations landscape very quickly," said Scott Happ, Black Knight's president of secondary marketing technologies. "The wave of refinance activity of the last year and some months has suddenly given way to a purchase-heavy mix. The implications of this shift touch nearly every area of mortgage lending, which in turn has implications for the wider economy."

"We also saw credit scores pull back, a trend that's likely to continue among refis as high-credit borrowers, who have been largely driving record volumes, exit the market" said Happ.

If these homeowners do slowly exit the market, credit availability will continue to open up for borrowers with lower credit scores and options for higher LTV products. Zillow's senior economist Jeff Tucker estimates this next wave of buyers will be millennials.

"More affordable, medium-sized metro areas across the Sun Belt saw significantly more people coming than going – especially from more expensive, larger cities farther north and on the coasts," said Tucker. "The pandemic has catalyzed purchases by millennial first-time buyers, many of whom can now work from anywhere." 

Millions will enter the housing market in 2021

In what will be known to future generations as the Great Reshuffling, a recent Zillow survey showed that more than 1 in 10 Americans reported moving in the past 12 months, either by choice or by circumstance. And now, with the COVID-19 vaccine circulating and the economy slowly regaining strength, Zillow researchers say millions of additional households could enter the housing market in 2021, as reported by HousingWire.

Among the surveyed movers, approximately 75% reported moving for positive reasons, such as being closer to family or friends or living in a desired part of the country. That's a major cause of the Great Reshuffling, as work-from-home became a national norm during the pandemic and allowed people to live wherever they wanted – so long as they had an internet connection.

"More affordable, medium-sized metro areas across the Sun Belt saw significantly more people coming than going – especially from more expensive, larger cities farther north and on the coasts," said Jeff Tucker, Zillow senior economist. "The pandemic has catalyzed purchases by millennial first-time buyers, many of whom can now work from anywhere." 

Finally, Zillow's housing market report underlined how important the accelerated development and adoption of real estate technology was in the last 12 months, and how buyers and sellers will be relying on it going forward.

Approximately 80% of those surveyed said they would like to view a virtual home tour and a digital floor plan before buying, if they were shopping for a home. Zillow officials said homes on its 3D Home Tour platform were saved by buyers 32% more than homes without, and received, on average, 29% more views than listings without.

Online real estate has trickled down to all aspects of the industry, including with appraisals, closings, and underwriting.

Weekly Mortgage Rate Update

Mortgage rates took another dip this week as the 30-year fixed-rate mortgage decreased by almost ten basis points, week over week. 

The economy is improving on the demand side. But on the supply side, a variety of goods and materials remain scarce, resulting in pricing pressures and causing inflation to rise. Despite the pause in mortgage rates recently, they are still expected to increase modestly for the remainder of this year.

The Freddie Mac weekly survey shows the average rate for a 30-year fixed mortgage is 3.04%, which is 0.09 point lower than last week, and down 0.27 points from this time last year.