MReport November 2020

TheMReport — News and strategies for the evolving mortgage marketplace.

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46 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST ORIGINATION Generation Z's Homebuying Behaviors Researchers say Gen Zers are poised to make an even greater mark on the housing market. T hose born after 1996 are entering the years in which many Ameri- cans begin shopping for homes. Despite the economic tur- moil created by COVID-19, this Generation Z is starting to buy, according to a LendingTree study that examines the most popular destinations for Gen Z buyers, as well as other key homebuying behaviors. "Gen Zers comprise just under 10% of potential homebuyers in any of the nation's largest metros. But as the economy recovers and more of them reach adulthood, Gen Zers are poised to make an even greater mark on the housing market. While their overall im- pact on housing may be hard to predict, it's clear that some Gen Zers are eager to join the ranks of homeowners sooner rather than later," LendingTree reported. To determine where Gen Zers are seeking homes, researchers analyzed "mortgage purchase requests made across the nation's 50 largest metros by people aged 18 to 23 on its online marketplace between January 1 and October 1. Here are the critical things dis- covered in LendingTree's study: Salt Lake City, a metro with a population that tends to skew younger, and the relatively inexpensive Oklahoma City and Indianapolis are the metros where Gen Zers make up the largest percentage of purchase requests. In Salt Lake City, 8.47% of purchase requests came from Gen Zers. In Oklahoma City and Indianapolis, the share of Gen Z requests is 8.01% and 7.74%, respectively. In pricey areas such as San Francisco; San Jose, California; and New York City, Gen Zers are making the smallest percentage of purchase requests. Gen Zers made just 2.19% of the purchase requests in San Francisco, 2.98% in San Jose, and 3.30% in New York. Gen Zers in San Francisco, San Jose, and New York City also had the highest average credit scores in the nation. Because loan amounts in these metros are so high, lenders usually require borrowers to have higher credit scores to get approved. For that reason, the average combined credit score for these three areas is 703, which is 39 points higher than the average for all 50 of the nation's largest metros (664). Gen Zers in Birmingham, Ala., Memphis, Tenn. and Virginia Beach, Va., had the lowest average credit scores across the nation's largest metros. Credit scores in these three areas were 641, 644, and 647, respectively. Nearly a quarter of Gen Zers surveyed by LendingTree reported receiving no down pay- ment assistance when purchasing a home. While 86% of Gen Zers received help to come up with a down payment from at least one source, including their parents or their employer, 24% said they came up with the funds without assistance. How the Pandemic Shifts Lenders' Challenges Recent surveys show what issues are on the minds of lending executives and how they're addressing some of the problems caused by COVID-19. C OVID-19 has caused significant shifts across all industries—and the lending business is no different. In May and again in August of 2020, STRATMOR Group asked executives about what their big- gest concerns are in the industry. The findings show that the pandemic has led to several significant issues to weigh on the minds of those working in the mortgage industry. According to the re- port, 38% of executives said productivity and process- related issues were their top concerns. The next biggest problem was working from home, as 21% said they were worried about how remote work would impact the industry. Forbearance was another concern, with 17% of those surveyed saying it was a cause for concern in the industry, and 10% reported having technology concerns. STRATMOR asked its August 2020 Operations Workshop attendees to talk about their main worries six months after shelter-in-place rules began sweeping the country. By August, 41% of those sur- veyed said that capacity man- agement was the number one concern. Twenty-four percent said retention and recruiting is- sues were a significant problem, and 16% were mainly worried about morale and burnout in the industry. Productivity and process concerns—which had been the main issue on executives' minds just a few months before—was now a primary concern for 12% of those surveyed in August. How the industry has handled capacity management issues varies. In August, 25% of operations ex- ecutives surveyed by STRATMOR said they managed capacity by increasing overtime. Fifteen per- cent of operations executives had responded by hiring temporary staff and 13% shifted staff. When asked how they might address burnout and morale con- cerns, operations managers sug- gested solutions like virtual happy hours, a shorter weekday once per week, assistance with benefits like childcare and dog sitting, and other solutions geared towards balancing employees' work life and personal life. By August, 41% of those surveyed said that capacity management was the number one concern.

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