I came across an interesting article on HousingWire recently. The piece focused on what Millennials and Gen Z’s want when stepping into the homebuying experience. Of course, being a Millennial myself, and having recently experienced the homebuying experience, I was interested to see other perspectives. I’ve also written about selling homes to Millennials on more than one occasion.
This particular article was based upon a survey of 1,000 Millennial and Gen Z homebuyers who’d experienced the process some time in the first half of 2022. Not surprisingly, when asked what best described the mortgage process today, almost 46% opted for “overly expensive.” About 36% found the phrase “[o]utdated, slow and lengthy” to be the best descriptor. Surprisingly enough, about 31% felt the process could best be described as “fast and straightforward.”
Hmmm. I wouldn’t have predicted that one. But I am glad to see it.
Moving on, when asked what the biggest barriers to entry into the homebuying market might be, the leading responses were a virtual tie (at about 46%) between “high debt-to-income ratio” and “insufficient down payment or closing funds.” Interesting stuff.
But here’s what really got my attention. This survey also zoomed in on what Millennial and Gen Z borrowers seek in a lender. I’ve written more than once here and elsewhere that Millennials actually aren’t seeking a 100% digital experience when buying a home. We don’t want an FAQ or a bot guiding us during one of the most important transactions of our lives. We do want quick. We don’t like time-wasting or redundant interactions. But we want a knowledgeable professional who can guide us through the process.
These particular survey respondents, for the most part, agreed with me. Asked “Is a personalized service, with the ability to meet with a loan officer in person or virtually, important to you?” Almost 80% replied “yes.” Not surprising when you consider that about a quarter of respondents, asked how knowledgeable they believed themselves to be about the mortgage process, felt they had “very little knowledge” or “no knowledge.” Another 40% of the respondents classified themselves as “somewhat knowledgeable.”
Finally, another surprise in this report. Many of the lenders I know tend to believe that, when it comes down to it, borrowers of any generation look at rate and rate alone. About 57% of this survey’s respondents agreed with that sentiment. 53% were looking for lower fees (multiple answers were allowed for this question, apparently). But almost half of the homebuyers surveyed suggested “personal guidance and support from the lender” would influence their choice of lenders. 47% also considered “sense” of trust as a key factor.
And yes, for the mortgage tech side of me, a satisfying 44% of those homebuyers felt they chose their lenders in large part because of the “speed and efficiency of the entire process.”
As I’ve said before, this is a numbers-based industry that doesn’t always base its decisions on numbers. So I always love taking a look at studies like the one we’ve been discussing here. For me, it confirms, to a large extent, what I’ve been saying all along: my generation, by and large, doesn’t necessarily need to have a mortgage process we can take from start to finish on an iPhone, although we’re also not enamored with reams of paper and prolonged, data-exchanging phone calls, either. We want a lender who listens to us, helps us determine our needs, and provides us with sound advice. To be honest, that sounds like just about any generation of home buyer, to be honest.
As I mentioned, we’ve been discussing my own homebuying experience this summer on Triple L. I hope you can take a moment to check it out!
We at LodeStar are grateful to all of our clients, friends and colleagues who take the time to view Deeper Thoughts. Please consider having a look as well at some of our other great content, including our podcast, “LodeStar’s Lending Leaders,” and our new graphic-oriented series, “A Tale of Two Mortgages.”
As always, your feedback is welcomed and appreciated!