Stepping back, mortgages for young medical professionals represent a growing niche in the market. Offering a medical mortgage loan reinforces the breadth and diversity of a lender’s overall capabilities and better positions them as a solution for potential customers with a wide variety of needs. Banks offering medical professional mortgages are also a desirable destination for mortgage professionals, especially considering that doctors’ high potential earnings will eventually allow them to pursue more expensive homes. At TD Bank, for example, we’ve leveraged our successful medical professional mortgage business over the past two years to hire great MLO talent. And attracting top talent committed to this specialized market allows us to broaden and diversify our customer base for this niche offering.
Difficult homebuying conditions for young doctors
In this housing market, young medical school grads will need lenders’ help. On Aug. 6, President Joe Biden extended for a final time the pause on student loan repayments to the end of January 2022. Ending the freeze will hit most medical graduates hard and complicate their homeownership ambitions.
Of the almost 20,000 US medical school graduates in 2019, 73% carried debt, according to the Association of American Medical Colleges’ most recent data. The median debt for indebted graduates then amounted to $200,000.
The White House delivered the news at a time when the median price for an existing home rose to $359,900, an almost prohibitive level for many first-time homebuyers with substantial debt. High demand at the upper end of the market and limited supply in the lower tiers continue to buoy prices, according to the most recent National Association of Realtors numbers.
Supporting this demand, mortgage rates continue to linger near all-time lows. The average monthly rate for a conventional 30-year fixed-rate mortgage dipped to 2.87% in July from 2.98% in June and 3.02% one year earlier, according to Freddie Mac data. As long as borrowing costs hover above historic lows, homebuying demand will likely remain elevated.