Insights

Lending to the Next Generation of Homebuyers: 5 Strong Strategies

November 19, 2021
,
Certified Credit

The Millenials, and the not far behind Generation Z, engage with media differently than past generations. What does that mean for lenders that hope to reach this younger demographic?

You may have to adjust your advertising techniques.

According to Enact’s 2020 Statistical report, first-time homebuyers made up 56% percent of the mortgages in 2020 in the United States.1 Additonally, young Millennials (ages 22 to 30) and older Millenials (ages 31 to 40 years) in this group of consumers make up the largest share of homebuyers at 37 percent.2

These first-time homebuyers prioritize a positive customer experience over affordable fees when choosing a mortgage broker. Making your services accessible to first-time homebuyers will create a new level of brand awareness for your agency and heighten your popularity among the generation of the future.

So, how do you, as a lender, address these differences?

1. Invest in a Website

It should come as no surprise that the future of lending revolves around a digitized framework. An easy-to-use website is one of the most practical and powerful assets you have for mortgage lead generation. A poorly organized or difficult-to-navigate website is a roadblock to first-time homebuyers who value the convenience and accessibility of online information and applications.

Here are three key components to a well-crafted website:

  • Simple access to the application processes
  • Transparent mortgage and home equity loan rates
  • FAQ section

In general, applications that require little or no physical paperwork are more attractive to younger borrowers. But remember, the first time doing anything can be overwhelming, so use your website to lay out a step-by-step guide for them to follow.

Many first-time homebuyers feel like they’re struggling in all the unfamiliar terminology, numbers, and conditions. A successful lending site should help educate and guide inexperienced homebuyers through the loan process. Popular lending websites often offer learning resources and contact information to help decrease the stress and pressure on new homebuyers.

2. Have a Social Media Presence

If you want to attract the youngest generation of homebuyers, you need to be where the borrowers are, namely, on social media. Advertisements on Facebook, Instagram, YouTube, Twitter, and TikTok reach first-time homebuyers much more effectively than television or radio ads these days.

Maintaining an active social media presence shouldn’t feel like an obligation. It should be fun, and it’s one of the best ways to build brand recognition with logos, color schemes, and photography.

Millennials may use social media to compare you to other lenders, so it’s important to put your best foot forward on profile pages and share helpful content that shows your expertise, values, and personality. Social media instant messages or post comments are also common ways for potential borrowers to make first contact with lenders, so be sure to offer quick responses to questions posted online. This will give you the benefit of being the first lender in contact with potential clients.

3. Look Beyond Credit Scores

A recent report from The National Association of Realtors found that 50% of people who have yet to purchase a home blame student debt for delaying a mortgage.3 As you know, homebuyers who are new to the market often have lingering student debt and maybe even a few other large purchases affecting their credit score. Their scores can misrepresent their actual financial situation.

Although it requires more time and effort, it is worth diving deeper into a person’s background, education, and employment history. Looking beyond the surface of their credit score may reveal a broader picture of their situation. Alternative credit data points such as rent or utility payments paid in full and on time, regular savings account deposits, and asset ownership may solidify a borrower’s credibility despite past credit missteps.

Yes, there is still an elevated level of risk inherent in offering a loan to someone whose credit score is sub-par. Still, if you are willing to accept more risk, you may make mortgage loans more accessible to the largest population of borrowers.

4. Be Personal, Smooth, and Seamless

What will your clients tell their friends about the lending experience with your agency? Will it be a gripe about how slow and cumbersome the process was? Or, will it be an enthusiastic plug for your fantastic customer service? Attracting the younger generations of homebuyers means putting extra effort into a seamless and personal experience for the borrowers.

5. Offer Financial Literacy Help

As credit lenders, promoting financial literacy is a win-win. Clients feel empowered by their new knowledge, and you build a glowing reputation for being a helpful and transparent partner. There are several ways to champion financial literacy at your agency:

  • A series of YouTube videos outlining the process of buying a house from start to finish
  • A glossary of definitions and explanations of credit, mortgage, and interest topics
  • Infographics and blog articles answering FAQs
  • Social media posts that present useful information
  • Guiding homebuyers with credit score improvement tools

Offering valuable information without any expectations establishes you as a trusted, helpful resource and perhaps a trustworthy lending partner when the time is right.

The Takeaway

Attracting the next generation of homebuyers will always be a moving target. As a lender, the challenge is to stay up to date with where potential borrowers seek information and their priorities.

Having online applications and engaging with people through social media platforms is quickly becoming the new normal and the future of mortgage lending. Offering financial literacy materials on these platforms will not only help you do your part for society, but it will also increase traffic and build your brand’s reputation. By implementing these five strategies for reaching the next generation of homebuyers, you can achieve your goals and meet borrowers where they are, helping them thrive because of your expertise in the industry.

 

Sources
1 Enact. First-Time Homebuyer Market Report.
https://blog.enactmi.com/first-time-homebuyer-market-report/

2 National Association of REALTORS® Research Group. 2021 NAR Home Buyer and Seller Generational Trend Report.
https://www.nar.realtor/sites/default/files/documents/2021-home-buyers-and-sellers-generational-trends-03-16-2021.pdf

3 National Association of REALTORS® Research Group. 2021The Impact of Student Loan Debt
https://cdn.nar.realtor/sites/default/files/documents/2021-the-impact-of-student-loan-debt-report-executive-summary-09-14-2021.pdf