At Mortgage Cadence, one of the ways that we deliver technology leadership to our lenders is by going directly to borrowers to learn about their needs, expectations, and feelings about the loan origination process. In a partnership with Accenture Research, we surveyed over 1500 borrowers that had recently obtained a mortgage. This article examines our findings of 699 18 to 34-year-olds that are associated with the often-discussed Millennial segment of the lending population, a key part of the survey. Of all our findings, I want to share three that can be applied by lenders today, using their existing technology solutions.
1.) The value of an attractive rate
There is a lot of industry focus on lenders employing huge marketing budgets to tout a simple application process, as if that were the primary driver for applicants. However, we found that more than half (55%) of Millennial respondents said that the number one reason that they chose their lender was because the lender offered the best rate. With so much competitive pressure to focus on the borrower experience, it’s a great reminder that lenders also must deliver on tangibles that are important to borrowers, including an attractive rate.
2.) The value of an in-person loan officer
Many lenders are focused on automating all parts of the origination process. Over 65% of Millennials in the survey met with their loan officer in-person prior to signing their closing documents. Notably, when we look more closely at younger Millennials between 18 and 24 years old, an astonishing 78% met with their loan officer in-person prior to closing. This finding dispels the common myth that Millennials are all about building virtual relationships in isolation. Considering the significance of this major purchase and contracting event, we found that the commonly held notion of Millennials shunning in-person relationships does not hold here. To extend this finding further, we found that, of those Millennials that did not meet with their loan officer prior to closing, half of them wished that they had done so.
3.) Top issues for Millennials
When we asked Millennials about the aspect of the entire loan process that they wished was easier, 27% wanted the loan application to be easier, 29% wanted borrower document delivery to lenders improved, and 36% of respondents wished for an easier way to determine the best lender for them. Because new borrowers may not have the financial connections or familiarity with the lending process that other age groups enjoy, it follows that finding a lender that they can trust to work is a significant concern.
It’s logical for lenders to get caught-up in a focus on technology solutions that streamline an application process and origination efficiencies. However, our survey findings show us that it is just as important when considering the influx of millennials into home ownership that lenders deliver on a competitive rate, ensure that LOs are supported in their need to effectively build relationships with applicants, and that lenders sharpen their marketing messages so that applicants can easily self-identify with the lender’s target demographics.