The materials available in this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your own advisors with questions regarding Millennials and Gen Z Homeownership. The opinions expressed in this article are of the individual authors and may not reflect the opinions of MeridianLink, Inc.
The American Dream of white picket fences surrounding perfectly manicured lawns and well-kept 2-bed, 2.5-bath houses may be a bit of a generalization, but there’s no denying that the common dream of Millennials homeownership is alive and well among all generations — including millennials and Gen Zers.
However, especially among these younger demographics, this dream is complicated by several converging challenges — a disproportionate cost of living relative to stagnant wages, escalating housing costs, lackluster credit scores, debt burdens, and limited inventory — that amount to one major challenge: housing affordability.
Millennials & Gen Z Want to Buy Homes
Millennials and Gen Zers make up a significant portion of the future housing market—in fact, they represented 40% of all U.S. mortgages taken out in 2023. Trends in Millennials homeownership are becoming more noticeable each year.
But, despite their eagerness for homeownership, they’re often hindered by financial challenges and credit constraints that make securing favorable mortgage terms difficult. For example, more than one in three millennials and Gen Zers carries a subprime credit score below 600.
That said, these generations do want to purchase homes; they just might require additional support and innovative solutions from their financial institutions to do so.
That’s Where You, the Financial Institution, Come In
Escalating costs and the concerns associated with them mean that it’s crucial for financial institutions like yours to meet millennials and Gen Zers where they are, providing helpful products and services to support their expectations and unique circumstances. Millennials homeownership opportunities rely heavily on this support.
To help you deliver on these demands, it’s imperative that your organization invest in an advanced tech stack offering the seamless, convenient digital experience that younger borrowers overwhelmingly prefer.
Already, technology is drastically reshaping every aspect of the home-buying process—from the convenience of online mortgage platforms and virtual home tours to sophisticated debt optimization solutions and application experiences. These solutions’ capabilities are often critical for supporting millennials and Gen Zers in navigating and overcoming common homebuying hurdles. Additionally, this technology can help your institution streamline the origination process, reduce costs, and boost ROI, opening the possibility of passing on savings to your borrowers. This can all contribute to improved affordability and stronger consumer relationships.
Developing a Winning Strategy
To help more young people achieve their homeownership dreams, you need a solid strategy behind your technology, too. Here are three items to consider in developing that strategy:
- Borrower Experience Is Key
Especially among younger generations, borrowers want more than just a transactional relationship. They need optional guidance, quality service, and a partner to support them in reaching their goals. Millennials’ homeownership experiences can greatly benefit from such a supportive relationship.
Borrowers come from a variety of circumstances that inform how you’ll need to approach the relationship. Some factors — such as higher rates and home prices — are universal experiences, but other factors widely vary from person to person. For example, first-time homebuyers may need more guidance throughout the process than someone purchasing their second home.
- The Right Technology Makes a Difference
Today’s borrowers demand a seamless digital application experience free from confusion and frustration. If your mortgage loan origination system (LOS) isn’t evolving alongside borrower needs and shifting market dynamics, you leave your process vulnerable to delays, errors, and inefficiencies that can, in turn, lead to irritated applicants, missed opportunities, and even damage to your institution’s reputation and growth.
Is Your Mortgage LOS Equipped To Meet Modern Borrower Expectations?
Ask yourself the following questions:
- Are manual tasks causing bottlenecks?
- Is your mortgage lending operation struggling with service latency?
- Are you relying on costly third-party vendor solutions?
- How are these challenges impacting your profitability and borrower relationships?
If some of these challenges feel familiar, don’t worry! These are just a few of the very common struggles mortgage lenders face, and they’re all easily addressed with the right solutions for Millennials homeownership.
MeridianLink® offers more insights, key takeaways, and potential solutions related to mortgage lending in our eBook “Navigating Millennial & Gen Z Mindsets Amid the U.S. Housing Crisis.”
Download it today to take the first step toward embracing young aspiring homeowners.
