How Millennials Will Determine the Future of the Mortgage Process
Everyone has seen the statistic: the Millennial generation now represents the largest share of potential homebuyers.
This is true. Millennials passed Baby Boomers a few years ago, and now account for 34% of potential homebuyers, versus a 30% share for Baby Boomers. The gap widens every year.
Contrary to the conventional wisdom that Millennials aren’t actually buying homes, Ellie Mae reported that this group represented 45% of all purchase loans in January of this year.
So it’s not only the largest group of potential homebuyers, but they are also starting to flex their purchasing muscles.
This isn’t going to change, except possibly to accelerate.
Everyone in the mortgage industry has recognized this pattern developing.
But not everyone in the industry is prepared to meet the needs of the Millennial borrower profile.
How are Millennial borrowers starting their homebuying experience?
Yes, Millennials have grown up with advanced technology at their fingertips, but not in the manner in which many people think. This is not a group that has “always had a smartphone” in their pockets.
In fact, the older portion of this generation did not have access to basic mobile devices until they were teenagers.
This is a group of people, however, that has enjoyed the capabilities that technology has given them and have an easy time grasping and taking advantage of the advances being made.
This is why most new buyers are beginning their journey on listing sites like Zillow, Trulia, and Realestate.com before even speaking to a professional.
(Don’t worry, real estate agent referrals will remain strong for the foreseeable future. 90% of Millennial purchasers still engage with a real estate agent.)
Social media and review sites like Yelp! give these buyers the tools to vet their local real estate and mortgage professionals before engaging in a transaction.
There is a strong desire to be informed and educated prior to actually embarking on the path to homeownership.
How do Millennials want to engage with a loan officer?
To continue to be successful as a loan officer as the majority of the purchase market becomes Millennials and Gen X, embrace the personality and needs of the generation.
- Technology-enabled process
- Digitally integrated services
- Honest, transparent communication
- Professional expertise and information
Unsurprisingly, Millennials want a technology-enabled process that allows them to be as self-service as they want to be.
This means having a secure platform that they can have trust in, and a mobile platform that they can access whenever they want.
Mint.com (the popular budgeting and account aggregation tool) was founded over 10 years ago, so there is an expectation amongst the group that their information should already be digitally accessible. This expectation manifests in the mortgage industry with services that automate verifications of assets, incomes, employment, and credit.
You would be very wrong if you think that this group hasn’t taken notice of the digital abilities of Rocket Mortgage, SoFi, and other non-banks. They know it’s possible, and they expect it to become the rule not the exception.
On the flip side, most Millennials still want an expert to ensure the process is smooth, quick, and closes with minimal issue. Remember when we said that their is a strong desire for information and education prior to engaging the process? That desire doesn’t stop once the transaction begins.
That is where transparency and communication throughout the lending process become ultra valuable. Millennials absolutely do not want to be the middle man in their transaction, needing to coordinate the process between all of the stakeholders.
Be honest, enable self-service, provide education, and automate the processes that can be automated. Do those things, and you’ll be well positioned to serve tomorrow’s borrower.