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18 | M R EP O RT FEATURE T he wave of refinancing that drove mortgage market volumes over the last two years is quickly abating as the threat of rising interest rates looms. It goes without saying that in such a market climate, loan officers will have to pivot their attention to the purchase market. Of course, that's easier said than done, but here's a quick roadmap that lenders should also be consid- ering as they shift their attention to a new buyer demographic. Shifting Demographics C onsider this: Latinos are the only demographic in the United States to increase their rate of homeownership for each of the past six years, according to the National Association of Hispanic Real Estate Professionals' (NAHREP) analysis of the 2021 homeownership data from U.S. Census Bureau's Current Population Survey/Housing Vacancy Survey. The data shows that Hispanic households saw an upward trajectory in 2021 despite facing one of the most difficult housing markets for first-time homebuyers in history. In 2021, the Hispanic homeownership rate increased to 48.4%, adding a total of 657,000 new Hispanic owner households since 2019. Additionally, Hispanics added 1,025,000 net new house- holds, accounting for 27% of household formation growth over the last two years. More than half of homeown- ership growth over the past decade has come from the Latino population—and there's so much potential for future growth. In our own recent, in-house analysis, we delve deeper into the numbers in creating a clear outlook for this kind of lending in 2022. The age structure of the Latino population—which, at an average age of about 29 years old is ap- proximately 14 years younger than the general population—is one of the most significant contribu- tors to the strong growth in the homeownership rate, according to NAHREP. In 2020, nearly half (43.6%) of Latino homebuyers were under the age of 34, compared with 37.3% of the general popula- tion. Today, nearly one in three Latinos is currently in the prime homebuying years (25-44), accord- ing to U.S. Census Bureau data. Key findings of a recent analysis by show that over the next five years, 75% of all first-time homebuyers will be women, millennials, or people of color, and all net household growth will be from households of color. Between 2020 and 2040, there will be 16.1 million net new households. Hispanic house- holds will grow by 8.6 million, households of other races (mostly Asian households) will grow by 4.8 million, and Black households will grow by 3.4 million. White households, on the other hand, will decline by 0.6 million. This demographic shift shows that net growth in the number of homeowners from 2020-2040 will be entirely among people of color, especially Hispanic homeowners. Between 2020 and 2040, there will be 6.9 million net new homeowner households, a 9% increase. Hispanic homeowners will grow by 4.8 million, homeowners of other races (mostly Asian) will grow by 2.7 million, and Black homeowners will grow by 1.2 million. There's no denying that tapping into this homebuyer base is es- sential for loan officers to succeed. But here's the problem: although the Census Bureau's Current Population Survey/Housing Vacancy Survey shows that while Latino homeownership gains were positive, they still trail gains in the overall market. Overcoming Homeownership Obstacles D espite the business poten- tial, the fact is that Latinos continue to face critical road- blocks to homeownership. Latinos purchase homes with an average down payment of 3.5%, and have a median credit score of 668 and median debt-to-income ratio of 41%—a borrower profile that may make them more vulnerable to mortgage underwriting standards cut-offs and changes, according to the NAHREP study. Latinos are, as a result, more than twice as likely to use FHA loans to finance their mortgages, compared to their non-Hispanic white counterparts. In 2020, Minority Report Now is the time to promote minority homeownership and find solutions for the barriers that exist today. By Shashank Shekhar

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