Higher Rates Did Not Deter Millennials

Summer temperatures and higher rates appeared to have little effect on the Millennial homebuying market, according to August data from the Ellie Mae Millennial Tracker. Conventional loans remained steady at 64 percent of all closed loans by this generation, while FHA mortgages stayed at 32 percent—a market share they have held since June. The average loan amount for loans closed by Millennial borrowers in August of 2017 was $185,919, a slight increase from August 2016’s average $184,113, despite the average 30-year note rate having increased to 4.211 percent from 3.706 percent last year.

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In August 2017, the average Millennial primary borrower was a 29.4-year-old who took out a Conventional loan of $185,919 to purchase a home with an average appraised value of $223,882. This average homebuyer had a FICO score of 724, which helped them get a 30-year note rate of 4.211 percent, and they closed on their home in 44 days. The majority (64 percent) of primary borrowers were male. Additionally, more than half (52 percent) of borrowers were married.

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On the West coast, the average Millennial borrower was slightly older, at 30.6 years old, taking out a loan of $314,579 on average. Average loan amounts were lower in the Midwest, with homebuyers of age 29.5 closing loans averaging $158,584 in Kansas, for example. In Hawaii, borrowers of 31.4 years took out loans averaging $396,766.

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Overall, Millennials were most likely to close loans for the purpose of purchasing a home (87 percent). Refinances accounted for 12 percent of loans closed by Millennials in August.

“Average loan amounts in August of this year were slightly higher than last year, despite higher interest rates,” said Joe Tyrrell, executive vice president of corporate strategy for Ellie Mae. “As tends to happen with tight inventories, this is a seller’s market, and many of today’s homebuyers may be faced with paying a premium for the same home they might have bought for less last year. For those who are committed to buying a home, though, slight increases in competition, costs or interest rates will likely not deter them.”

Other key findings from the August 2017 Ellie Mae Millennial Tracker include:

The top five markets where Millennial borrowers represented the highest percentage of homebuyers in August were Lima, Ohio, Batavia, N.Y., Dyersburg, Tenn., Roswell, N.M., and Kendallville, Ind.

Female homebuyers increased their purchase power, with closed loans in August averaging $189,574, up significantly year-over-year from $184,094. Males took a slightly smaller jump, averaging $196,246 in August 2017, versus $194,913 last year.

The metropolitan region with the largest percentage of female homebuyers (63 percent) was Mankato, Minn., with an average loan amount of $136,597 and average borrower FICO score of 723.

Males made up 60 percent of the Millennial market in Lima, Ohio, with loans averaging $86,845 and averaging borrower FICO scores coming in at 725.

The Ellie Mae Millennial Tracker is an interactive online tool that provides access to up-to-date demographic data about this new generation of homebuyers. It mines data from a robust sampling of approximately 80 percent of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass all-in-one mortgage management solution.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Let’s Stop Trying To “Figure Out” Millennials

Millennials, millennials, millennials. Within the past five years, the term has invaded our vernacular and been used to sweepingly define a segment of the population that is apparently begging to be figured out by marketing experts in virtually every industry. But this demographic isn’t some unsolvable, complex equation. Marketers must simply work to communicate and meet the needs of each subset.

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A 20-25 year old is going to have a much different set of expectations when it comes to speed and convenience; for the most part, a world without the internet access is not one with which they’re familiar and mobility is an expectation, not a preference. In contrast, the 33-37 year old segment was coming of age at a time when the evolution of consumer technologies started taking off. As they have progressed into adulthood and into their careers, digital and mobile tools have ignited an appreciation for an ever-increasing level of ease. And then in between these two groups, 26-32 year olds became familiar with the internet as adolescents and developed an expectation that information should be easily accessible. The common denominator is convenience and the path of least resistance. My question is: are lenders equipped to provide that path?

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The industry has made significant progress in creating a frictionless, digital mortgage process. The move toward automation of income, employment and asset verification has already reduced lenders’ reliance on W-2’s, pay stubs and any other documentation that traditionally slowed underwriting. Even the manual verification process has become much more streamlined, provided that the lender is working with a comprehensive and trusted partner. In addition, the introduction of trended credit data allows lenders to to discern who, among two borrowers with identical credit scores, poses a higher risk. This facilitates more accurate and intelligent lending decisions, improving the quality of portfolios and contributing to the continuous decline in delinquencies. The pieces are available for lenders to deliver the level of convenience that will satisfy millennial homebuyers. So what’s next?

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First, originators need to become adept at converting the data and analytics into actionable components of the digital mortgage workflow to truly support the end-to-end origination process. If the borrower can use the app to transfer documents and close the mortgage, but still needs to come to the branch in person to get approved for the loan, there’s a good chance that the process will end before it even begins. Alternatively, if the borrower can get approved for a loan digitally, but needs to complete the rest of the process manually, it’s going to create friction and result in losing the business. In other words, don’t try to fool anyone.

Once the operational pieces are in place, the next thing that a lender must do is create a marketing strategy that clearly communicates and educates consumers on the value of the digital mortgage process. Shout it from the rooftops! Diving deeper, lenders must know where the borrower is in his or her respective lifecycle. Someone just out of college will be focusing on starting a career and saving money (and potentially paying down student loans). It’s unlikely that a home purchase is in the immediate future, but it is certainly on the horizon, so it’s important to establish that relationship so you’ll be the lender of choice when the time comes. An individual that is several years removed from college may have saved diligently and based on other financial triggers (paying down various loans, expanding their lines of credit, etc.), they may be a great prospect for a lender to get the dialogue started. Finally, older millennials may already be homeowners, but could also be prime prospects for home equity lines of credit (HELOCs) for home improvements or additions. As rates continue increasing, HELOCs will become more popular products thanks to the low cost of equity extraction and the ability for the borrower to tap into the funds as needed, instead of all at once.

As you can see, there is plenty of information available to lenders that will reveal where a prospective borrower is in the journey to homeownership. Supplementing that, geographical data shows the areas where low- to moderate-priced housing is plentiful or where buying is a more economic decision than renting. And as rates continue increasing, time is of the essence; it’s important to maximize the largest opportunities in each market while they’re still there.

I’m not the only one who has witnessed the evolutionary trajectory of the mortgage industry and how it has coincided with the increasing demand for convenience. So let’s stop trying to figure out millennials. The frictionless mortgage process is a reality and the tools are already there to help lenders accurately identify and appropriately market to borrowers of all ages – it’s time for us to put all of the pieces together and grow the business.

About The Author

Seth Kronemeyer
Seth Kronemeyer is vice president and vertical-marketing leader at Equifax Mortgage Services. He is responsible for pricing, product management, product marketing, campaign management, and mergers and acquisitions. Kronemeyer brings more than 15 years of industry experience to his position at Equifax, including marketing, sales, business-development and e-commerce expertise. He can be reached

It’s Not One Or The Other

Fifty-seven percent of homeowners applied for and completed their latest mortgage completely in person, while more than one-quarter of homeowners (28 percent) applied for their most recent mortgage using a combination of online and in-person interaction, according to the 2017 Borrower Insights Survey of homeowners and renters conducted by mortgage automation provider Ellie Mae. Another 11 percent of homeowners applied for their latest mortgage completely online with no in-person interaction.

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When asked what factor would have improved the mortgage process, approximately 40 percent of homeowners indicated they would have liked a faster process with fewer delays. Twenty percent indicated that a shorter, easier to understand application would be preferable, while 11 percent asked for more communication with their lender throughout the process.

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Millennials were the most likely generation of homebuyers to begin their mortgage application online and finish it with an in-person interaction with their lender (30 percent). Gen X (28 percent) and Baby Boomer (20 percent) borrowers weren’t far behind in using this online and in-person approach.

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“There’s no question that technology is playing a larger role in the home buying experience,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “As we expected, many homeowners are seeking a faster and more streamlined experience. And it’s not just a millennial phenomenon; it’s homebuyers of all ages and both genders.

“But what’s even more telling is that homeowners still want a personal interaction with their lender. They want someone who can answer important questions, and make them feel confident that everything will be handled correctly and on time. While 27 percent of millennials identified the speed of the process as the top area to improve their experience, surprisingly 23 percent cited more face-to-face interaction as the second-greatest opportunity for improvement. By leveraging technology, lenders can provide a more high tech experience to simplify and speed the overall process, while still having the high-touch interactions when and where homebuyers want,” Tyrrell said.

The Ellie Mae survey found that today’s homebuyers most value speed, security and simplicity when applying for a home loan – all of which are enabled by technology. Millennials and women were the most likely to cite security as the most important factor when they applied for a loan. Gen X and Baby Boomer buyers were more likely to value the speed of the process. All three generations equally valued simplicity.

About The Author

Tony Garritano
Tony Garritano is chairman and founder at PROGRESS in Lending Association. As a speaker Tony has worked hard to inform executives about how technology should be a tool used to further business objectives. For over 10 years he has worked as a journalist, researcher and speaker in the mortgage technology space. Starting this association was the next step for someone like Tony, who has dedicated his career to providing mortgage executives with the information needed to make informed technology decisions. He can be reached via e-mail at

Breaking Through To Millennials


In today’s ultracompetitive mortgage market lenders of all sizes are realizing the need to connect with millennial borrowers. To do so, it is critical to understand who these potential borrowers are and the best ways to market to them.

I recently listened to a webinar that provided great insight into this topic. The title of the webinar was “Marketing to Millennials: Essential Strategies for B2B and B2C” Presented by: Trish Witkowski, Foldfactory with Steve Belmonte, of Accuzip.

Here are some of the key insights that they shared. They started with who are Millennials and how big of an opportunity this demographic represents?

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Who are the Millennials?

  • k.a. “Gen Y”
  • 1980-2000 15-35 years old
  • Gen Y= 87+million
  • Gen X=69 million
  • Baby Boomers 78 million

Gen Y will be the largest and most powerful group of consumers this nation has ever seen (Kenneth Gronbach, The Age Curve). Its members are already consuming at 500% of their parents’ level in adjusted dollars for age. (Kenneth Gronbach, The Age Curve)

Millennials are digital natives. They have grown up in digital environments. The rest of us are digital pioneers. Only 6% think online advertising is credible. (SocialChorus) 95% see friends as their most believable source of product information. (SocialChorus)

The topic of marketing to millennials is not a new one but everyone wants to talk about what the big guys are doing. The challenge when looking at the big guys is the resources that they have at their disposal and understanding how to apply that to your business. Look at Coca-Cola, their marketing budget is just under 3 Billion. Nike is at $2.4 billion in marketing spending.

The good news is that budget aside, the same principles that these companies use to market to Millennials can apply to your business.

Here are ten principles of Marketing to Millennials (M2M)

  1. Authenticity– Are you authentic? So you have to ask yourself…
    1. Are we who we say we are?
    2. Are we transparent?
    3. Do we accept responsibility?
    4. Do we share our passion?
    5. Are we consistent?
    6. Do we care?
  2. Accessibility– 70% of Twitter users surveyed expect a response from brands they reach out to on Twitter (Lithium Technologies) 53% want that response in under an hour. 72% want that response in under an hour when they have a complaint. In this study it talked about how a negative brand experience could quickly change into a positive one if the response came within under an hour. They want you to acknowledge them and let them know that you are working to address their problem or concern.
  3. The Human Touch– Brands are moving from intellectual connections to emotional connections. The ability to have a human touch is really important. It’s all about creating those brand connections that create brand loyalty. 95% of all decisions are based on emotion. Think about it, you buy from people you like, you buy products that you love. It s about creating the relationship.
  4. Consciousness– Over 85% of Millennials correlate their purchasing decisions to the responsible efforts a company is making. (SquareSpace) Is your company making responsible efforts?

An example of a company that is applying this principle is Life is Good. The last page of their catalog talks all about growing the good. Giving Back. Cause marketing. Cause marketing is when for-profit business partners with a non-profit organization for mutual benefit. Cause marketing tips: Be authentic, make a connection, work it into corporate culture and don’t just write a check.

  1. Personalization– Personalized marketing communications stand out. Advancements in print media have taken the cost and complexity out of versioning. This allows companies of all sizes to do amazing things that really stand out.
  2. Speed- Millennials have a great need for speed. So, as a company you need to think about: Load speed of your web pages, quick clicks, fast checkout process, and fast response. They don’t have a lot of patience waiting for things.
  3. Technology Integration– In general Millennials expect a technology-integrated brand experience. We now spend more than 8 hours a day consuming media. (ZenithOptiMedia, 2015) So much of that is digital- our phones, tablets, laptops, podcasts etc. So print and the tangible experience have the opportunity to have a huge impact. Print + technology (email, PURL’s QR codes etc.)
  4. Social Media -Millennials are very social. Social media tips: No blatant sales pitches, keep it short, use good social media manners, interact with them, create opportunities to share, have a sense of humor. 41% of Millennials said the main reason they abandon content is that it’s too long (NewsCred) You have to be thinking about getting to the point before they abandon the content.
  5. Rewards– Millennials love loyalty programs. 68% of 20-34 year olds said they would change where they shopped if it meant getting more program rewards. (Bond Brand Loyalty) One third of those surveyed reported buying something they didn’t need or want just to earn points or increase membership status. (Bond Brand Loyalty)
  6. Ease of Use– There should be no barriers to entry in the brand experience. Easy access to website, mobile friendly etc.

Reach Millennials on their mobile devices. Think about how to get them on their mobile devices. They are always on their mobile devices. Use print to enhance the digital experience.

B2B- 46% of potential buyers researching B2B products are Millennials today, up from 27% in 2012. (Google and Millward Brown Digital) By 2020, the U.S. workforce will be 50% Millennials. (Millennials as B2B Buyers) So the key is the principles are the same.

So where should B2B focus their efforts? Definitely in mobile. 42% of researchers use a mobile device during the B2B purchasing process. (Google and Millward Brown Digital) and that trend is only going to go up and up.

The “Mobile First” Strategy: Responsive web design, intuitive navigation, speed, ease of use, and integration of video. 70% of professionals researching B2B products and services now use video across the purchase path. (Google and Millward Brown Digital) Integrating video is a big part of the purchase process. Get your clients to take video of themselves using your product and post it to your website.

Millennials preferred attributes for doing business: ease of doing business, willingness to collaborate, and industry/marketplace expertise. (IBM Institute for Business Value) Millennials rely on analytics…and the opinions of others.

70% of B2B decision-makers today begin their research through a generic online search. (Google and Millward Brown Digital) Millennials are open minded. Whether they are spending their own money or someone else’s, Millennials expect the best value.   So what works? Stand out format, personalized content, targeted audience and it must be memorable.

The key to breaking through to Millennials is understanding who they are and how they prefer to be marketed to. What works? Creative and interactive format, integration of mobile technology, combination of print and digital, integration of video, and simplicity of concept.

This is the digital generation who demands personalization, ease of use, and the ability to interact with your brand where and when they want. The combination of digital and print will help you stand out to the Millennial crowd.

About The Author

Brandon Perry
Brandon Perry is President at The Turning Point. Brandon oversees all operational and administrative activities of TTP. Brandon brings over 16 years of experience in various financial services industries to TTP which enhances the Company's ability to maintain it's position as industry leader in providing customers with an advanced marketing solution.

Reaching Younger Borrowers


Confusing, stressful, expensive, and overwhelming—these are just a few words millennials are using to describe the impact of student loans.

Student loans are beginning to have a ripple effect for many young adults, changing their perspective of financial responsibility in the process. Financial aid packages and student loans that once seemed distant and remote are now creating larger, more concerning issues for the recent college graduate.

According to a survey by American Student Assistance (ASA), student loans have a direct impact on daily life for many recent grads. The ability to go out to sporting events with friends, have cable television, or go shopping is being hampered by student loans. While these issues are not trivial, the bigger picture is a bit more disconcerting.

Financial instability due to student loans affects the purchase of larger items such as houses or cars; yet, they also are starting to affect marriages, family planning, retirement savings, and other large investments.

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Most students do not think about how their student loans will affect them five to ten years down the line when they are first entering college. Since students are receiving these loans for the purpose of higher education, many believe that student loans will be simple to pay off once they have a steady, nine-to-five job.

Sadly, this is far from the truth. Student loans are expensive to begin with, but for many students, they are necessary to achieve a college degree in the first place. The problem becomes the skyrocketing interest rates. These interest rates accumulate over time, and become a daunting expense for college graduates.

In fact, these student loans directly impact family life. The cost of weddings and marital expenses only continues to increase, and men and women alike are delaying marriages due to student loans. Instead of spending money on a wedding or a down payment for a new house, couples are choosing to delay their marriages due to immense student debt. ASA reported that 29% of participants admitted that student debt was a direct factor in delaying their marriage.

Those that did marry admitted that student loans were an important factor in deciding when to start their family. A striking 43% of participants claimed that student loans and debt delayed their decision to start a family. While these statistics do not indicate that student debt has affected the majority of young graduates, they certainly display the growing concern for college students and recent graduates to understand financial responsibility.

While student loans and financial aid are not inherently harmful, they can definitely be troubling when mismanaged or misunderstood. When applying for loans, students do not take enough time to explore all their options and typically settle for high interest rates. However, these loans paired with growing interest rates will take longer to pay off and will prevent the purchase of other larger items such as a house or a car.

For these reasons, it is crucial to understand student loans before accepting anything and everything that is offered. Additionally, ASA encourages students to apply for grants and scholarships rather than strictly applying for loans or financial aid.

Since 1982, financial assistance packages have shifted from being predominantly grants and scholarships to financial aid. While this shift cannot be undone, it does not mean that students cannot search for outside scholarships and grants. With companies and websites such as Fastweb and Niche, there certainly is not a shortage of scholarships; students simply need to take advantage of this fact. Grants and scholarships do not need to be paid back, and they do not affect one’s credit score, so they are more beneficial in the long run.

Universities benefit from offering more scholarships over time because it affects their graduates’ decision to donate to the school after graduating. ASA noted that student debt affects young graduates’ willingness and ability to support and donate to their alma mater. In fact, ASA cited that 72% of recent graduates admitted that their student debt affected their willingness to donate, and 77% percent of participants claimed that student debt affected their ability to donate to their alma mater.

Starting salaries for college graduates average about $45,000 per year. With student loans, credit card bills, and the cost of living, the ability to save money seems extremely challenging. The inability to save money over an extended period of time, along with high interest rates and potentially low credit scores, makes obtaining a mortgage quite difficult.

Three out of four participants disclosed that they had concerns about the ability to purchase a home because of their student debt. A car and a home are traditional purchases that naturally come into the picture after graduation. However, many people delay these purchases because they either are unable to receive a loan in the first place or realize that they will not be able to afford monthly payments.

Monthly payments on a house or a car can seem daunting when coupled with other standard monthly payments, specifically student loans. Students pay upwards of $300 each month for student loans, leaving them little room to spend money on other larger purchases.

ASA reported that recent college graduates had a higher debt-to-income ratio, meaning that the average grad spends 43.56% of their income on student debt, credit card bills, and mortgages combined.

As a result, many grads do not even qualify for mortgages and have little to no money remaining for an auto payment. Yet, the problem remains because graduates consider these two things essential.

Recent college graduates continue to be severely impacted by the staggering cost of student debt. When these people apply for a loan for a car or a mortgage for a house, these issues become paramount.

Students and graduates alike must see the big picture and borrow less, while simultaneously borrowing more wisely to avoid the harrowing effects of student debt. Student loans have the power to delay marriages, family life, retirement, and the purchase of items such as cars and homes. The bottom line—don’t let student debt consume your life and delay any major events or purchases in your future.

About The Author

Megan Hammond
Megan Hammond is a marketing intern for Catholic Vantage Financial, a Michigan based Credit Union. Her blog, Check This Out (, explores the challenges Millenials face when it comes to finances. From discussing the merits of debit and credit cards to the impact of purchasing a coffee from Starbucks everyday, Check This Out covers it all. For more information on Catholic Vantage Financial visit

LOS Helps Lenders Reach Millennial Borrowers

As lenders scramble to get new borrowers, and younger borrowers, a good LOS should be there to help in this process. For example, Ellie Mae has launched the Ellie Mae Millennial Tracker, a new interactive online tool on millennial loan trends in the United States. Here’s how it works:

An online tool, which will be refreshed with new data the first week of each month, the Ellie Mae Millennial Tracker provides access to up-to-date demographic data about this new generation of homebuyers. Searches can be tailored by borrower geography, age, gender, marital status, FICO score and amortization type. The Ellie Mae Millennial Tracker mines data from a robust sampling of approximately 66 percent of all closed mortgages dating back to 2014 that were initiated on Ellie Mae’s Encompass solution. Given the size of this sample and Ellie Mae’s market share, it is a strong proxy of millennial mortgage indicators across the country.

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March data from the Millennial Tracker showed that women were listed as the primary borrower on 31 percent of closed loans. The average primary FICO score for female loan applicants was 724 and the average age was 30. By comparison, men were listed as the primary borrower on 66 percent of closed loans and had an average age of 29 and an average FICO score of 727.

“The mortgage industry is poised to experience a monumental shift as more millennial homebuyers begin to enter the market,” said Joe Tyrrell, executive vice president of corporate strategy at Ellie Mae. “There are roughly 87 million would-be homebuyers in the millennial generation and 91 percent of them say they intend to own a home one day. Lenders must prepare today to meet their needs.”

“Our new Ellie Mae Millennial Tracker gives mortgage lenders perspective into the next generation of homebuyers in order to better serve them, and ultimately help make their homeownership dreams a reality,” added Tyrrell.

Thirty seven percent of mortgages made to millennial homebuyers since 2014 were FHA loans and took an average of 44 days to close. Conventional loans represented 60 percent of the loans made to millennials during the same period and took an average of 43 days to close.


Loan Type Percentage of Loan Type Average Primary FICO  Average Days to Close
Conventional 59%   749   42
FHA 38%   692   43

The Ellie Mae Millennial Tracker is a supplement to Ellie Mae’s monthly Origination Insight Report, which focuses on loans that closed in a specific month and compares their characteristics to similar loans that closed three and six months earlier. The Origination Insight Report will continue to be released on the third Wednesday of each month.

Progress In Lending
The Place For Thought Leaders And Visionaries

The Big Deal About Millennials

According to CNN, many of our nation’s Founding Fathers could be considered the millennials of their day.

Sitting beneath their white wigs at the Constitutional Convention in 1787 were young innovators around the age of Mark Zuckerberg or Taylor Swift. In fact, James Madison — our nation’s fourth president — was the youngest delegate elected to the Continental Congress at 29. He authored the Constitution by age 36.

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Millennials have a “can-do” attitude about tasks at work and look for feedback about how they are doing frequently – even daily. Millennials want a variety of tasks and expect that they will accomplish every one of them. Positive and confident, millennials are ready to take on the world.

They seek leadership, and even structure, from their older and managerial coworkers, but expect that you will draw out and respect their ideas. Millennials seek a challenge and do not want to experience boredom.

Millennials need to see where their career is going and they want to know exactly what they need to do to get there. Millennials await their next challenge – there better be a next challenge.

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Millennials are the most connected generation in history and will network right out of their current workplace if these needs are not met. Computer experts, millennials are connected all over the world by email, instant messages, text messages, and the Internet.

How do mortgage lenders target this group you might ask. Mortgage Master did some research on millennials. They tried to find out how this group ticks.

Mortgage Master was founded in 1988 by Leif Thomsen and grew into one of the largest privately owned mortgage lenders in the nation. Since its inception, Mortgage Master has funded over $60 billion in loan volume.

In looking at this group, Mortgage Master found that when it comes to their priorities, Mortgage Master found that 52% view a successful marriage as a priority; 30% view being a good parent as a priority; 21% view helping others in need as a priority; and 20% view owning their own home as a priority. That should be good news for lenders.

Going further, the research found that 73% of them want to have children; 66% want to get married; and 93% want to own a home in the near future.

Millennial Info Graphic

Progress In Lending
The Place For Thought Leaders And Visionaries

Move the Millennials


Cheri-BoothFor the past 30 years, the housing market has always rebounded from the bottom up. First time home buyers have to move off of the sidelines and buy houses. Once that happens, it creates more demand than inventory which then starts to create appreciation. Move up buyers then move up and this creates inventory for the first time home buyers.

The challenge now, however, is that the move up buyer is not buying. Either they don’t have enough equity in their home yet or they are still unsure about the economy and are not willing to take on the risk of a larger mortgage payment.

There is a false illusion today that the market is okay. Ultimately, the key to the whole real estate economy is the first time home buyer showing up to buy their first house. If they don’t, the entire market stagnates. Builders don’t build houses, roofers don’t put on roofs, landscape companies don’t design yards, fencing companies don’t build fences, etc.

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Prior to mortgage meltdown, people were standing in line to buy houses. Home prices were increasing by 20-30% in some markets and people were buying houses for the wrong reasons. It was easy to do because they didn’t even need to qualify. People were buying for investment purposes only because it was the single largest appreciating asset on their balance sheet and they thought they could just sell the house next year and make a ton of money. Young couples were afraid if they didn’t buy at that time, they would soon be priced out of the market.

Now, after mortgage meltdown, housing prices are still 10-50% less than they were at their peak. A buyer still only needs a 3 1/2 % down payment and interest rates are still at all time lows. So why are first time home buyers not standing in line to buy houses?

The first thing that needs to happen is that mortgage originators and real estate agents need to understand the Millennials, this new generation of first time home buyers. From there, they have to be prepared to educate them, not just pre-qualify them.

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Originators and real estate agents need to adapt to how the Millennial thinks and how they learn. This generation starts out trusting no one and they are research maniacs. This means that they take forever to make a decision. We call them the “YouTube generation” because they learn in bite-size chunks of video and are attached to their smart phones and tablets. Unfortunately, because they are so reliant on the internet for research, they are receiving a lot of misinformation. One “expert” says it’s a great time to buy and another tells them they are better off to keep renting. They hear on Good Morning America that they need a 20% down payment. Ultimately, a confused mind does nothing and that is what is happening.

The focus needs to be taken off of the decision on whether they should buy or keep renting, and instead placed on educating them to become the most informed renters possible. So, whether they are looking to buy now, in 5 months or in 5 years, they will have a plan in place to become home buyer ready.

The problem with most marketing aimed at first time home buyers is that it assumes that the consumer has already made the decision to buy a home. Providing information on what an appraisal is and why mortgage insurance may be required falls on deaf ears when the target audience hasn’t even decided whether it makes any sense to buy or if they are better off renting.

One of the biggest struggles that an originator faces is how to engage with the Millennial in the first place. There are many great products for first time home buyers aimed at providing a rent versus buy analysis. For those that are ready to buy a home right now, these tools are very helpful. The problem, however, is that many Millennials are not sure if they want to buy a home. That being the case, sharing a rent versus buy analysis does nothing to engage this consumer.

The biggest challenge that we see facing originators as they market to this Millennial generation is that they are going about it all wrong. Many don’t understand this generation of future home buyers, how they think and how they learn. Originators are accustomed to the quick sales cycle of the past several years. Therefore, they struggle with what to do or say when they have a renter who is not ready to buy now, and is unsure if they even want to buy a home at all or keep renting instead.

At best, the originator will add them to an email drip campaign that contains wonderful information on the mortgage loan process and why now is a great time to buy a home. The problem is those emails are not being read or, if they are, the message is falling on deaf ears. First of all, for a Millennial who starts out trusting no one, an email from someone they have no relationship with will just be deleted before it’s even read. Furthermore, if they haven’t even decided if they want to buy a house or keep on renting, receiving a communication about the appraisal process or what is mortgage insurance or what not to do when applying for a loan just goes to prove that the originator does not understand them.

We have to take an earlier approach with the Millennials, understanding that they start out trusting no one and don’t want to talk to anyone, but would rather conduct research themselves. Because Millennials take longer than any other generation to make a decision, originators and real estate agents also have to think long term and have a way to incubate this consumer, all the while showing empathy and building trust. The sales pipeline needs to be redefined to focus on incubating leads that will eventually turn into buyers.

So the questions become, (1) how do originators find the Millennials (2) what do they say to them once they find them, and (3) how to they incubate them eventually moving them off of the sidelines and into their first home. Even more important we believe is how originators reach this generation of future homebuyers before they’ve made the decision to buy a home, when they are in what we call the “pre pre-qual phase?” If originators can reach the Millennials at that point, employ empathy and build trust through and education first approach and nurture them along to the point that they are home buyer ready, they real estate market will be revived.

In a survey of 318 renters that we conducted, we found that 317 of them wanted to buy a home at some point. The reasons they gave for not doing so right now were job security, down payment, credit score, DTI ratio per the guidelines, DTI ratio comfort zone (for some that self imposed a stricter ratio), misinformation, mobility/liquidity and “waiting for the bottom”. Nowadays that may be waiting for inventory, waiting for a promotion, etc. Misinformation was the number one reason and, interestingly, we have found over the past four years that 22% of the time the renter has the ability to buy a home right now, they just didn’t know it.

Helping the Millennial to overcome these obstacles and create a plan to become homeownership eligible is where the focus needs to be placed. Only then will we be able to help move them off the sidelines and into their first homes.

About The Author


Cheri Booth is Vice President of Sales at Path2Buy. With over 16 years of experience in the mortgage and real estate industries specializing in database management, marketing automation and customer loyalty marketing, Cheri has a passion for helping her clients grow their business to the next level. As Vice President of Sales at Path2Buy, she oversees the client acquisition process including on-boarding, training and implementation. Her extensive marketing background as well as her many years in field sales enables her to effectively coach her clients on how to increase their purchase leads and generate a future pipeline of homebuyers while creating powerful partnerships with real estate agents and insurance agents.

Marketing To Millennials


TME-Becky-BarbaraThe individuals born between 1980 and 1995 are considered Gen Y/Millennials. They are the largest generation (82 million), bigger than the Baby Boomer era (72 million). As many people know, Gen Y is saddled with tremendous student loan debt (over $1 trillion), live at home with their parents for longer periods of time than Gen X and Baby Boomers. They tend to marry later in life (30s) and they are very comfortable with technology.

In fact, Internet access and cell coverage figure into decisions being made on where they will live, where they will work and what and how they will purchase everything. Because they are so comfortable with technology, this has made them very adaptable. As reported in a recent issue of “Mortgage Professional America”, they can text with their eyes closed, multi-task all day long and somehow stay in touch with everyone they have ever met. Because this generation is so large, they will assume a larger share of the mortgage market in the coming years. According to a recent report by The Demand Institute, Millennials will spend $1.6 Trillion on home purchases in the next five years – more on a per-person basis than any other generation.

So if this generation is so large and willing to spend so much on housing, why have we not seen a boom in housing reflective of the 1970s when baby boomers were flooding the housing market? What are the obstacles that are holding this generation back from purchasing that first home?

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Millennials have been accused of stalling the housing recovery because of their reluctance or inability to purchase a home. In fact, the 30-34 year old group has the lowest homeownership rate in decades. While there are some changes in the rental markets as pricing increases, there still appears to be a changing dynamic in the Millennials home-buying pattern.

Many are choosing to live in city centers rather than in more tradition suburbs. This location allows them to take mass transit to work and play putting them closer to their office and entertainment centers. More and more construction is occurring with mixed use properties and city center-like amenities in the same area. An example of this is a section of Bethesda, Maryland where a mall is being torn down and replaced with a large number of mixed use properties offering condominiums, restaurants and office space. The trend of buying older homes and restoring them with modern facilities for today’s young families also continues in many areas, especially where these homes are near mass transit.


However reacting to new housing trends and offering better amenities will not resolve all of the obstacles that face the millennial generation when it comes to buying homes. One of the largest obstacles these new borrowers will have to overcome is the huge student loan debt they are repaying, and it won’t just be what they are paying at the time of application. Fannie Mae has long required that all deferred installment debt, including student loans not yet in repayment, be included in the calculation of the borrower’s debt-to-income ratio, either by obtaining a notice of the future payment or including a payment of 2% of the outstanding balance.

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However student debt is not the only obstacle that these individuals face when applying for a mortgage. While having a two year work history does not seem difficult to obtain, members of the Millennial Generation are more likely to move jobs frequently until they find their best fit and more likely to leave a job because it is not a fit for them. These gaps in employment have been viewed as instability of income and an issue when applying for a mortgage loan.

In addition to just qualifying for a mortgage, this generation has other obstacles to overcome. Rob Chrisman with The Stratmor Group writes that statistics tell us that that young adults today are more likely to be foreign born and speak a language other than English in the home. This shouldn’t be too surprising given the demographics of the states like California, Florida and Texas which have large populations of Latin Americans. Yet these issues can make the task of obtaining a mortgage appear almost insurmountable for many of these potential applicants.

There is also concern that this generation is being priced out of the market. The rise in home values disallows the affordability of home purchases in many real estate markets around the country. Many metro areas lure the younger generation that are seeking employment in the technology fields because of the quality of work and availability of well-paying jobs. Unfortunately these markets are extremely expensive for home ownership for this generation. More affordable housing is necessary to allow millennials in markets such as San Francisco, CA and Boston, MA. Some of the markets with affordable housing include Austin, TX; Dallas, TX; Des Moines, IA; Grand Rapids, MI; New Orleans, LA; Salt Lake City, UT; Seattle, WA; Minneapolis, MN; Denver, CO. Each of these markets boasts a significant population of millennials, promising job growth, affordable housing prices and plentiful inventory.

Another obstacle that lenders are most likely not aware of or haven’t seen as a problem is the person acting as intermediary between lenders and borrowers. In other words, the loan officer. According to the consulting firm of C. Cowan & Associates, the average age of a loan officer is 54 years and the average age of a realtor is 59. Not only is the age gap significant, there is a huge disconnect with the future customer according to Cowan. “The world is changing, and the best way to get good ideas is to get new minds. There are young people in the mortgage business, but that number isn’t where it should be.” (Mortgage Professional American, Dec. 2014)


There is no doubt that reaching out to this generation and creating opportunities for homeownership has to occur. Otherwise this next generation will fall further behind in wealth accumulation and could drag down the economy which is significantly dependent on housing. While there is yet to be a clear pathway developed within the industry, there are signs that things are beginning to change.

Guideline changes that recognize the debt load these individuals are carrying has been recognized as seen by the recent change by Fannie Mae to modify student loan repayment structures to use an income-based approach in calculating changes in the payment due over time. As a result the monthly payment calculation has decreased from 2% to 1% of the outstanding balance. In addition, for all student loans, regardless of their payment status, the lender must use the greater of the 1% calculation or the actual documented payment. An exception will be allowed to use the actual documented payment if it will fully amortize the loan over its term with no payment adjustment. “Therefore even if the payment is deferred we still have to factor in either the actual future payment or use the 1% calculation.

Another recent positive change is the reduction in the FHA Mortgage Insurance Premium. Late last year the amount of the monthly payment had been increased which unfortunately prevented many of this generation from purchasing their first home using this financing option. Based on the outcry from mortgage lenders, this increase was recently reversed.

The need to bring in younger loan officers that are in tune with and are comfortable with the same technology as this generation is great. However, there are very few individuals from this generation rushing to be part of an industry that has, in recent years, been viewed as one with little integrity and overwhelmed with regulation. However, one company, Churchill Mortgage headquartered in Brentwood, Tennessee has created the CMC Academy for their staff with a goal of strengthening its relationships with customers by supporting and understanding the Millennial’s unique needs. “To engage this group, we must understand their lifestyles, attitudes and the unique challenges that they face,” Mike Hardwick, president of Churchill Mortgage, previously said. It is evident that this company recognizes that this generation values trustworthiness, authenticity and accessibility due to the numerous interactions and transactions that they experience on line. They are more comfortable with text messaging vs. emails or the phone. They don’t have a lot of patience to read stacks of documents and take the time to understand the complete lending process.


The good news is that there is opportunity here for companies who see the value of understanding this generation and educating these future borrowers in a way that brings the company business and creates loyalty from the borrower. Also, mortgage companies who hire younger generation loan officers who are well trained and relate to the millennial borrower will provide the opportunity to generate loans for this segment of the market for years to come.

However, this industry has shown to be particularly reluctant to change so the challenge will be how quickly and effectively the changes that need to happen occur. We can only wait and see.

About The Author


Rebecca Walzak is a 32 year veteran and Industry Expert on Operational Risk Management and Organizational Control. She is a leader in developing Operational and Control automated assessments for lenders, rating agencies and investors. Walzak has expert knowledge in all areas of the mortgage industry including production, servicing and secondary. Barbara Perino is a Certified Professional Co-Active Coach guiding her clients who are executive leaders and their staff. Barbara has been trained through The Coach Training Institute (CTI) located in San Rafael, CA. She completed a Coaching Certification Program through CTI and the International Coaching Federation (ICF). Prior to becoming a coach, Barbara was a 16-year veteran of the residential mortgage industry.