Most mortgage lenders built their businesses providing mortgages to Baby Boomers. They helped Boomers become homeowners, move up to a larger house, buy a vacation home and later, transition to smaller retirement homes. The leading mortgage lenders also did a great job building relationships with the Boomer generation by helping them to refinance their homes numerous times.
The same process began with the subsequent generation “X,” as mortgage lenders worked closely with them to realize the dream of homeownership, facilitate career oriented relocations and save money through refinancing during various mortgage interest rate cycles.
But now a new generation is emerging as the dominant group among home buyers – the Millennials (also known as “Generation Next”) born between the late 1980s and early 2000s. It is becoming clear that they will not be reached with the same approach that worked with previous generations.
According to surveys conducted by Pew Research, Millennials want to marry, have children, own a home and save for a secure retirement in largely the same percentages as those from the past – they are just getting a later start.
The good news for mortgage lenders willing to modify their approach is that the improving U.S. economy and job market, along with growing wages, suggest that the time has arrived for many Millennials to actively move toward becoming homeowners. According to the U.S. Census, in March of 2015, for the first time ever, Millennials became the leading demographic cohort among homebuyers.
But to be successful in reaching emerging market Millennials homebuyers there are commitments a mortgage lender must be willing to make, including:
Commit to delivering the most comprehensive, accurate and direct information possible through phone apps, websites, social media platforms, as well as educational opportunities regarding the home buying process and the benefits of homeownership.
Commit employing technology to make the process of applying for and closing a home mortgage as easy and friction-free as possible. From scenario calculators to online applications, to tools that facilitate the collection and submission of documentation, mortgage lenders must offer a process that saves time, yet provides the unprecedented detail demanded by a well-educated customer base making serious financial decisions.
Commit to recruiting a younger, more diverse, balanced male/female workforce. In an industry that has endured so many challenges over the past eight years, younger workers have not viewed mortgage origination as a top career option. However, the work environment, flexibility and rewards match up well with desires of an ambitious Millennial workforce.