Tech savvy Millennials' mortgage
You've probably seen us mention that Millennials are the single largest segment of home-buyers in America.
However, the differences between Millennials & Baby Boomers on how they search and shop for a mortgage lender are drastic.
What differences separate Millennial borrowers from Baby Boomers?
The Millennial group has integrated technology into their daily habits. When it comes to mortgage shopping, their first action is not to call a real estate agent or ask their parents, they search online.
Millennials are more likely than older adults to shop around for a mortgage and compare apples-to-apples rates.
This is why most of new prospective homebuyers will use online resources to research homes and the mortgage process before they speak to a real estate agent, mortgage broker or lender.
Millennials are actually comparison shoppers
Millennials are far more willing to obtain multiple quotes from lenders vs. Baby Boomers or Generation X – on average, Millennials obtained more quotes, vs fewer mortgage quotes by Gen X shoppers and even fewer mortgage quotes by Boomers.
Websites like Kayak, Yelp!, and even Amazon have honed our Millennial demographic into savvy comparison shoppers, which is why we started Stem Lending, as a way to closely align ourselves with this trend.
Lastly, even though most of Millennial purchasers still engage with a real estate agent, Redfin data shows that a majority of Millennial sellers try to negotiate with the listing agent for a lower commission, compared to fewer Gen-Xers and baby boomers. A majority of the Millennials who tried to get a lower commission rate percent reported being successful.
Millennials have changed the way individuals shop for a mortgage;. They demand transparency, simplicity, and multiple lender options.
Are Millennials Engaging With Traditional Lenders Differently? How?
We've seen the percentage market share of the mortgage market shift dramatically. To put it in perspective, Most of the nation’s top mortgage lenders were non-banks, while banks contribution to new mortgage loans fell, according to The Washington Post.
As lenders have changed, so have consumers, and their behaviors. Millennials have reported a higher willingness to switch banks.
Millennials expect a digital first mortgage process
Whether a preference for technological automation, or the desire to educate themselves online first to narrow the knowledge gap, Millennials' expectations when engaging with mortgage brokers or lenders demands the following:
- Seamless user experience enabled by technology
- Trust through transparency on pricing and fees
- Honest, transparent communication from mortgage experts
- Educational tools for customers with a longer lead time until they buy
Millennials want a parallel track, they want a seamless process that can be fully online, and a mortgage product expert ready and able to step in to provide concierge level help should they have a question.
Trust through transparency means having a bulletproof platform where a customers' personal information will reside, should they need to work on their application in chunks over a period of days or weeks.
With apps like Acorns, Clarity Money, and now Rocket Mortgage, today's mortgage shoppers expect to be able to access all their information digitally, even if the application itself still happens at home on a desktop. Companies like Stem Lending who can integrate with third party vendors to verify income and assets seamlessly, are in the best position.
How have lenders and brokers responded?
A number of mortgage lenders have created incentives to attract and retain Millennial homebuyers.
At Stem Lending, we will work with you to understand your specific financial situations, your priorities in the home buying process, and find personalized mortgage options from our partner wholesale non-bank and bank mortgage lenders.