TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/1253630
26 | M R EP O RT FEATURE E ven with the world at a standstill, consumer expec- tations don't change. Millennials, born between 1980 and 1998, are the biggest group of people buying homes today (37% of all homebuy- ers). This group came of age with the internet and is considered the first generation of digital natives. Now, as they watch Netflix, get deliveries from Postmates, and order toiletries off Amazon, mil- lennials are honing their expec- tations of instant, tech-enabled experiences every moment they're in lockdown. They'll carry these expectations into the homebuying market. Technically, the market is favor- able to them—given low mortgage rates and less competition—but it's also marred by financial uncer- tainty and rising unemployment. For wholesale lenders, this means that, in addition to distin- guishing themselves via products and rates, they now need to stand out by facilitating an origina- tion process that's fast, digital, and painless—for both brokers and the customers they serve. Providing brokers with a stellar, technology- aided experience is one of the most straightforward ways of doing that. Here are four things wholesale lenders and brokers need to know about the mindset of today's homebuyers. Homebuyers Want Fast Processes, Despite Financial Uncertainty W ith some homebuying on pause, those who choose to take advantage of record-low rates are less likely to get into a bidding war for their dream home. But a lack of competition doesn't mean customers will put up with a drawn-out origination process. In its most recent Borrower Insights Report, Ellie Mae found that the top reason today's home- buyers abandon online mortgage applications is that they're taking too long to complete. That's important in the context of what borrowers like about online applications in the first place: Two-thirds prefer an online app because it offers a quicker time to close than a paper alter- native. Speed, in other words, matters. It's not just important during the application process, either: The most common way today's borrowers find lenders is via the internet. According to the National Association of Realtors (NAR), an online search (usually to home shop) is also the most common way buyers start the entire homebuying process. Also, mortgage process search terms involving "instant," "timeline," and "fastest" make up thousands of Google searches each month. That shouldn't surprise us in the age of Amazon, Netflix, and Google. We've gotten used to in- stant gratification in nearly every area of our lives. When we're faced with unpleasant wait times, it's only natural that we bristle. At a high level, then, it's crucial to recognize how important homebuyers consider speed and ease of use in a mortgage applica- tion experience. Especially during these uncertain times, homebuyers won't put up with a slow, cum- bersome mortgage process. Customers Want Support (from Humans!) I n 2018, Fannie Mae noted that 72% of people want to use a digital application and 65% want to work with a person. The NAR also found that the biggest pain point in the homebuying process for most borrowers (besides find- ing the right property) is paper- work; after that, it's understanding the steps and processes that go into buying a home. That aligns with Ellie Mae's finding that the top reason buyers choose not to take advantage of an online application is that they prefer to work through the pro- cess with a person. As custom- ers navigate a new homebuying process that's modified for social distancing, the need for profes- sional guidance and assurance will only grow. That's because the homebuying process is immensely complex. Homebuyers need a mix of both technology and professional expertise to guide them through it. They want a balance—a speedy mortgage loan process they can understand on their own with someone available for support at any given moment. This is where brokers play a critical role. They're the first point of contact for borrowers as they navigate the complex steps on the road to homeownership. When customers cry out for help, brokers need to be positioned to heroically respond. Homebuyers have warmed to the message that getting a mortgage loan should be fast and easy—es- pecially the ones looking to buy in this period of economic uncertain- ty. They're not casually browsing or floating the idea of homeowner- ship. They're in the market because they're motivated to buy. To win these customers, whole- sale lenders must equip brokers with the technology necessary to create a seamless homebuying process. A Homebuyer's Mindset Amidst a Pandemic How have attitudes toward the homebuying process changed due to COVID-19, and what does this mean for lenders moving forward? By Tim Von Kaenel