Millennials are expected to make up nearly one-third of the buyer pool in 2017, which should be another solid year for purchases. Mortgage brokers have a great opportunity to do more business with home-buying Millennials in 2017, and will be an easier task than one might have expected. It comes down to educating them on the mortgage process and why brokers are the best option, as opposed to overhauling their mindset. It is more a matter of coaching them through the process and dispelling myths versus giving them the hard sell.
A recent study conducted by Michigan State University revealed that a combined 51% of Millennials that have not yet purchased a home have either never heard of mortgage brokers, or have very little understanding of what they do. Along those same lines, 68% of those surveyed reported that they would be inclined to use a bank when purchasing their first home. The correlation between those statistics is pretty clear, as it’s easy to identify low broker awareness as the key driver in banks’ popularity in the minds of younger people – especially first-time homebuyers.
The concept of brokers being relatively unknown to people in their 20s and early 30s is understandable, especially among first-time homebuyers. That demographic has grown up watching movies and television shows where the concept of buying a home is stereotypically portrayed by a character throwing on a suit and going to the nearby big bank to apply for a loan.
Whether it is through marketing, community outreach or some other means, there needs to be more awareness created among Millennials, increasing their knowledge of the mortgage process and the mortgage broker’s role in it.
A buyer’s default mindset shouldn’t be to settle for a big bank just because they already have a savings account there, or because it’s the only way they have heard of to apply for a mortgage. The idea of relying on a mortgage professional’s expertise goes against the grain of the modern “do it-yourself” mindset that tech-savvy Millennials are hardwired with. Although, many homebuyers don’t realize that mortgage brokers offer those same technological capabilities. They consistently have access to new tools that make it easier to apply for a mortgage because they partner with lenders who stay on the forefront of industry technology.
With a serious life-changing financial decision like a mortgage, the first move should be to connect with a professional who can provide the borrower the best possible product and rate, someone committed specifically to focus on their mortgage.
That reshaped mindset isn’t that far off. The study categorized survey-takers into two groups – Millennials who had already purchased a home, and Millennials who aren’t homeowners yet, but plan to buy in the next two to three years. Here are a couple of promising results that highlight brokers being in a good position among Millennials:
· 72% of future Millennial homeowners agreed that mortgage brokers make the mortgage application process easier
· 60% conceded that a broker can find better loan options than they could find themselves
Ultimately, the ability of brokers to gain market share among younger first-time homebuyers comes down to getting in front of them, increasing awareness and making sure they understand the benefits that brokers deliver more than big banks and retail lenders. Data shows that they’re not opposed to using a broker; they just aren’t aware of them, how to find them, or the value they provide.
By explaining the ‘why’ behind the benefits and each step of the mortgage process, brokers have a great opportunity to break through to Millennials and capitalize on that growing segment of the market this year.