State of the mortgage industry half-time report

NextGen homebuyers lack confidence and an understanding of the mortgage process

Adjusting to today’s market can be dizzying after the last few years of historically low interest rates and high refinance business. However, the lenders and loan officers who will be most successful in the second half of 2022 will be those who pivot quickly, understanding both the nuances of the market and the best strategies to help solve problems for today’s homeowners, homebuyers, homesellers, Realtors and financial advisors.

We interviewed more than 25 mortgage industry experts to gather the best insights, strategies, and recommendations to pivot and win in today’s market. We partnered with HousingWire to release a few excerpts from the report.  

Millennials make up 44% of home purchases today. In a purchase-heavy market, understanding these consumers’ challenges and perspectives has never been more important. 

Generational nuances. As a generation, millennials have been groomed to expect the “press button, get mortgage” experience, but they are also terrified to make a wrong move with the biggest financial decision of their lives.

In a survey of over 3,000 NextGen homebuyers, we found that lack of education and distrust hit the top of their list of challenges, while a demand for personalized information was key to winning them over. 

  • Education: In the most basic financial literacy quiz, only a quarter of Millennials could answer four out of five questions correctly. And one in four NextGen homebuyers stated that their biggest challenge while buying a home was a lack of understanding. 
  • Distrust: Consumer trust has fallen across all sectors of business and government in the U.S. The 2022 Edelman Trust Barometer reported distrust is now society’s default emotion. Their research shows the U.S. Trust Index has declined 10 points since 2017, and the majority of Americans do not trust the central bank. In the 2021 NextGen homebuyer research, two in three stated they did not think lenders were trustworthy or reliable. 

Blockchain and cryptocurrency. In an era of growing distrust, NextGen consumers are particularly attracted to a decentralized structure of currency and the potential for blockchain and crypto to increase the speed, safety, and ease through which they transact. 

Despite its volatility, it is clear that digital currencies are the future and not a fad. According to Jim Park, executive chairman of The Mortgage Collaborative, who has stayed at the forefront of the growing technology in real estate, 12% of first-time homebuyers used some form of crypto towards their down payment last year. 

Blockchain will create a lot more efficiency in all transactions, including real estate, said Park. For example, he explained that companies are converting real estate into NFTs and using a smart contract to close in a few days rather than weeks. They’re also using the metaverse to tour homes from across the world, and there are many other applications that will likely change the way consumers purchase real estate in the future. 

“I think those are things that are going to force the industry to create more efficiency and some additional change, but also at the end of the day, it’s creating more transparency and more certainty to the consumers,” said Park.

Innovations in technology. Last year, we wrote an article in HousingWire about the recent shift in technology trends, which is even more evident in today’s purchase market. While mortgage technology will always improve in optimizing time and costs, the innovation today is in consumer empowerment. The best lenders are utilizing technology to put the control in the hands of the consumer through transparency, digestible information, and personalized advice. 

Dave Savage, co-founder and CEO of Mortgage Coach, recently presented at the Modern Mortgage Summit describing the history of mortgage technology over 36-years. Today, loan officers are not only having borrowers start the application with mobile devices and presenting a personalized, digital presentation, but they’re automating it with big data and predictive analytics. For millennials, this is the way they expect to be empowered through technology and mobile devices. 

The Move to hybrid. Most consumers don’t care about meeting in-person anymore, but they do still care about human advice. The way to build trust and win more business with the largest segment of the purchase market is to empower them with personalized information through a hybrid experience.  The future isn’t human versus machine on home values. It’s when to use which, according to the CFPB Director from the MBA Secondary Conference. 

“If I’m a customer, I don’t really care if you’re a broker, a loan officer, or I’m sitting in a call center… If I need you to help me, I’m going to want some human intervention at some point in the process because it’s too important a decision for me,” said veteran mortgage executive Bill Dallas.

For more trends and strategies aggregated from more than 25 of the mortgage industry’s leading experts, see the full report

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the authors of this story:
Dave Savage at [email protected]

Kristin Messerli at [email protected]

To contact the editor responsible for this story:
Sarah Wheeler at [email protected]

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