How Millennials and Gen Z Are Shaping the Mortgage Market

The makeup of the American population is shifting, and millennials and Generation Z now account for more than 40% of it. That’s impacting a wide range of industries, including real estate and mortgage lending. 

Per the latest data from the National Association of Realtors (NAR), millennials account for 38% of the homebuying market. And while Gen Z is just starting to get its toehold — making up 3% of homebuyers currently — that’s starting to change. Recent Redfin data reports that last year, almost 40% of mortgage originations were for millennials and Gen Zers. In fact, people under 35 made up the largest share of borrowers. 

It’s no surprise, then, that the mortgage market is changing shape to adapt to this growing share of younger borrowers. Here, we’re exploring a few ways your mortgage lending institution can leverage that to your advantage. 

The importance of your online presence

Millennials are a tech-savvy bunch, and Gen Zers grew up with smartphones. It’s no surprise, then, that they turn to their devices and the internet to get information throughout their homebuying journey. 

A recent NAR revealed that 100% (yes, you read that right) of homebuyers use the internet to find their house. 41% of millennials and Gen Zers even use social media to gather up information on their house hunting journey. 

And that extends to mortgage shopping, too. Per McKinsey & Company, 72% of customers start their home loan journey online. 

In other words, if your mortgage company doesn’t have a strong online presence, you’re missing a huge opportunity to reach this critically large share of potential borrowers. 44% of Americans start their search for a mortgage with a mortgage comparison website (like Bankrate), and 16% turn to real estate websites (like Zillow). In other words, six out of 10 borrowers are exploring their lending options — and evaluating you against your competitors — digitally. 

This represents a huge opportunity for your company. To get in front of these potential customers, explore advertising your rates on leading websites. Connecting any advertising you do to a lead workflow can help you generate more high-intent leads for your loan officers. 

Also, make sure that when potential borrowers find your website — whether that’s through your advertising efforts or organically — they land somewhere that feels accessible and informative. Featuring current rates is a must. With a rate table that automatically pulls rates from your product pricing engine, you can engage with leads without any added effort from your team.   

The opportunity for education

As younger people enter the mortgage market, there’s a huge opportunity to help them learn about their available options. Freddie Mac reports that notably large shares of both populations say they aren’t confident about their knowledge in key areas:

• The overall mortgage process (65% of Gen Z, 28% of millennials)
• The types of available loans (63% of Gen Z, 45% of millennials)
• The overall homebuying process (60% of Gen Z, 39% of millennials)
• Interest rates (54% of Gen Z, 39% of millennials)

Since Gen Z only makes up a sliver of the current share of homebuyers, it may make sense that nearly two-thirds of them don’t feel confident in their mortgage understanding. But since millennials are currently the biggest share of homebuyers, you would expect a greater portion of them to feel knowledgeable here. Nearly half of millennials say they don’t feel confident they fully understand the types of home loans that are available to them. 

To be successful in today’s mortgage market, lending institutions should work to build websites that clearly outline a borrower’s loan options. A personalized rate dashboard can be a huge asset here. 

You also want to be sure that Gen Zers and millennials who are hunting for more information know where they can find it with a real person. Ensure that you have readily available contact details for your loan officers. Dedicated webpages for each of them can encourage curious potential borrowers to reach out. 

The need for affordability

The majority of millennials and Gen Zers report a desire to become homeowners, but financial issues are keeping them from realizing that dream. RE/MAX reports that 63% of people surveyed from those age groups said they were ready and eager to become homeowners — but they faced the following obstacles:

• Upfront costs (40%)
• Qualifying for a mortgage (39%)
• High interest rates (36%)

Beyond that, 46% of respondents said they were concerned about affording their monthly mortgage payments. 

Your team can generate more business by helping Gen Z and millennial borrowers figure out how to make homeownership work with their budget. If you offer any first-time buyer or state-backed loan programs, for example, feature those on your website. Also, ensure your loan officers explain them to leads. 

Adding information about loans other than 30-year fixed-rate mortgages can help, too. Younger borrowers may not realize the opportunity that lies with something like a 5/1 ARM, for example. Helping them understand what different loan products would mean for their monthly payments is crucial. 

Additionally, look for ways to help would-be homeowners evaluate the situation for themselves. Featuring affordability calculators on your site allows them to play with different scenarios based on the home prices they're considering, for example. 

As millennials and Gen Z make up an increasing share of the homebuying population, your lending institution can take strategic action to cater to them. That starts with a strong website. Then, you can back that with a team poised to educate potential borrowers and help them find affordable options. 

If you're interested in deploying tools like rate tables, affordability calculators, and loan officer pages, we’re here to make it easy for you. Book a demo with our team today to learn about our plug-and-play options for your website. 

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