- You can now apply for a mortgage at some Walmart stores, after a partnership with Lenders One.
- The typical Walmart shopper makes $80,000 a year and could be priced out of today's housing market.
- Mortage applications are falling as interest rates rise and some Americans get priced out of homeownership.
At Walmart, you can buy anything from a Golden Girls themed Chia Pet to ethically sourced dog nail polish – and now you can also get a mortgage.
Lenders One Cooperative, a national alliance of independent mortgage bankers, banks and credit unions, recently announced a partnership with Walmart. The coop will be leasing space at select stores in an attempt to bring more mortgage solutions to shoppers. Currently operating in three locations, Lenders One says "there are many more opportunities to come."
"I could not be happier with the direction the cooperative is headed," Justin Demola, Lenders One CMB and president said in a statement, adding that his team is already seeing "tremendous" value in the solutions created for its members.
Walmart's typical shopper in the US earns about $80,000 per year. With recent mortgage rate hikes and assuming a borrower should spend 30% of their income on a home purchase, there's a good chance they are priced out of today's market, where the average home price is $392,000. So, although Walmart's low deals might offer customers a shopping discount, the convenience of Lenders One's in-store offices can't guarantee they will be able to afford homeownership.
Record low mortgage rates propelled a home buying frenzy during the pandemic – but they are now reversing course. As rates return to pre-pandemic levels, and home prices continue to rise affordability has reached an all-time low. Mortgage applications have mostly been on a decline since December, so although Lenders One will offer borrowers a convenient lending experience by setting up shop inside Walmart, applying for a mortgage may not fit within the same budget as shoppers' milk and coffee.
"For consumers, rising interest rates, lack of supply, and strong home price appreciation have reduced refinance activity and further constrained home purchase affordability, which, of course, is dampening lenders' expectations of future business activity," Doug Duncan, Fannie Mae senior vice president and chief economist, said in a statement.
Fewer and fewer Americans are applying for a mortgage
Pandemic-era mortgage deals are over as interest rates climb due to inflation. Rising rates could prevent many cash-strapped Americans from pursuing homeownership.
In February, mortgage rates hit their highest mark since the start of the pandemic and have been fluctuating ever since. Although rates slightly declined last week, they're still notably higher than the same time period in 2021. According to Freddie Mac, the average US fixed rate for a 30-year mortgage fell to 3.76% for the week ending on March 3. A year ago at this time, the rate averaged 3.02%.
"Rate increases are expected to continue due to a strong labor market and high inflation, which likely will have an adverse impact on homebuyer demand," Sam Khater, Freddie Mac's Chief Economist, previously told Insider.
In February, the median home-sale price reached an all-time high of $392,000, according to Realtor.com. During the month, home prices grew at an "unusually-fast" pace, researchers said, signaling that homebuyer competition will heat up this spring. As buyers compete for a limited amount of inventory, prices are likely to continue climbing, especially if mortgage rates rise further.
"It can be easy to get swept up in competition, so buyers should take the time to assess how higher mortgage rates could impact the affordability of monthly payments and consider adding a cushion at the top of their budgets." George Ratiu, Realtor.com's Manager of economic research and senior economist, said.