Millennials Are Finally Buying Homes But Are Lenders Ready?

According to National Mortgage News:

Millennials Are Finally Buying Homes But Are Lenders Ready?

Millennials still living at home in their parents’ basements has become the brunt of memes and jokes—and widely publicized in 2018 when a judge ruled that a New York couple could evict their 30-year-old son from the family home—but there’s a multitude of reasons why it’s taking this generation longer than previous generations to hit the adult milestone of homeownership. 

However, Millennials, those young adults now aged 23 to 38, are now entering their peak household formation and homebuying years. 

That’s good news for the U.S. economy in general—and mortgage lenders in particular. As a generation, the Millennials pack a lot of buying power. In 2019, their numbers surpassed that of the largest generation to date: Baby Boomers.1 Millennials are the largest generation in the U.S. labor force, according to a Pew Research Center analysis of U.S. Census Bureau data.2By 2025, the U.S. Census bureau predicts that Millennials will claim three-quarters of all jobs.3

Millennials are different than previous generations—not only in their delayed homebuying but also in how they approach interactions with financial institutions, including mortgage lenders. Taking a picture of a check on their phone and depositing it without visiting a branch is not novel, it’s the way Millennials learned to do banking. They expect real-time access to account and transaction data and are frustrated when it’s not available. 

In order for mortgage lenders to grow their Millennial originations, they need to improve underwriting processes to meet Millennials’ need for speed and convenience. 

Millennials are Launching—Just More Slowly than Previous Generations 

Millennials are slower to settle down and form households than their parents and grandparents. For instance, Millennials are older when—and if—they get married. In 1975, the median marriage age was 25 for men and 21 for women. In 2018, the median marriage age for men was 30 and 28 years for women, according to the U.S. Census Bureau.4

Whether single or married, Millennials are also taking longer to buy their first home. According to the Urban Institute’s 2018 Millennial Homeownershipreport, the rate of homeownership among Millennials is 37%. At the same age, Baby Boomers’ homeownership rate was 45% and Gen Xers’ was 45.4%.5

A variety of social and financial reasons have held Millennials back from buying their first home, but the tide is shifting. In the second quarter of 2019, 36% of homebuyers were first timers.6 The Urban Institute notes that while first-time home buyers took out about 40% of mortgages pre-housing crisis, today first-time buyers account for about 60% of purchase mortgages.7

How Streamlining Workflows and Connecting Property Insights Addresses Millennials’ Need for Speed

When Millennials apply for a loan, the mortgage lender must qualify the borrower and determine who owns the property, how much the property is worth, and the property’s risk profile. Traditionally, this has been one of the most time-consuming and fragmented parts of the mortgage process. The property valuation, flood determination, title search, and the assessment of environmental risk are all processes and information needed in order to verify collateral. There are many moving pieces, each data point being sourced from a different provider, which can ultimately lead to a lengthy or delayed process.

What has historically been accepted as the process norm does not align with the expectations of the most prominent generation in the home buying market today. Millennials have come to expect rapid, digital workflows in their daily purchase decisions, and in their mind, the home buying process shouldn’t be any different. 

As an industry, we are positioned to begin delivering a new norm to the rising generations through the use of modern technology. Combining these tools into a single, intuitive workflow would remove both time and cost from the underwriting process. Lenders could get deeper data insights on a property, make a risk-based decision, and close loans faster, ultimately improving borrower satisfaction. Fortunately, one leading technology provider has anticipated this market swing and is providing these tremendous benefits to lenders today.

AutomatIQ Collateral, an integral part of the AutomatIQ suite of digital mortgage solutions from CoreLogic, is this next-generation solution that streamlines collateral underwriting workflows and provides the collateral data and services lenders need to make underwriting decisions within a single solution. By delivering the data and analytics necessary to determine property ownership, value, condition and hazards –AutomatIQ allows lenders to make faster lending decisions, helping lenders compete in this changing market.

“We’re dedicated to keeping lenders on the leading edge of the digital mortgage industry by offering workflow solutions that are tightly integrated with automation and analytics,” said Vicki Chenault, Executive, Valuations Solutions Group at CoreLogic. “With AutomatIQ Collateral, lenders will now be able to access essential property data through a single-source, empowering them to originate loans faster, at a lower cost and with less risk.”

This, of course, is music to a millennial’s ears – and a critical element of any business strategy designed to target this highly profitable demographic group. Learn more about AutomatIQ Collateral and how you can build trust with the borrower as you save them time and increase transparency at every touch point. 

https://www.nationalmortgagenews.com/partnerinsights/corelogic/article/millennials-are-finally-buying-home