The Mortgage Market is Shifting: Here’s Why You Should Adapt

I recently attended the Digital Mortgage conference and had an opportunity to speak with several leaders in the tech space. There are shifts happening in the mortgage marketplace, and they’re pretty seismic. 

Consumers have replaced filling out paperwork and sending in documents over fax with using apps and e-signatures. Borrowers aren’t interested in working with the stuffy mortgage banker in a suit and tie; they want to do business with the in-touch lender who’s front and center, savvy and smart, and doesn’t speak industry jargon. 

Love it or hate it, the seas of change are roiling in our industry, and any business that hopes to remain relevant ought to adapt or risk slipping into extinction. 

What does this change look like? Let's start with the shifting demographics in housing.

Despite the years-long chatter that millennials, the country’s largest generation, would eschew homebuying to stay in apartments, young adults ages 22 to 39 are buying homes, and doing it in quicker numbers than ever before. At 38 percent, millennials make up the largest group of homebuyers in 2019, according to the National Association of Realtors. 

As rental rates continue to rise, millennials are taking cues from their parents and finding homes where they can settle down, start families and build equity. Skeptical? Take note of the latest data from Ellie Mae, illustrating that 59 percent of the home loans closed in August 2020 went to millennial buyers. 

Millennials aren’t just craving homes of their own — they’re on the cusp of emerging as the most influential force in the housing industry (TransUnion estimates that 17 million first-time homebuyers will enter the housing market in the next five years). That means endless opportunities await mortgage lenders who understand this generation’s wants and needs. 

Another facet of change in the mortgage industry is technology. Gone are the days when borrowers were willing to trek to a bank, sit down with a loan officer and spend hours combing over a 500-page loan application. 

In the age of Amazon, customers want speed and convenience. They want to apply for mortgages online — the same way they’d prefer to house hunt. 

Savvy mortgage companies are partnering with Silicon Valley developers, such as Roostify, to develop mobile apps and other products that make applying for a mortgage easier. They’re on a mission to meet customers where they are and make applying for a more mortgage accessible and less of a hassle. 

There's also a shift happening in the workplace. More than ever before, diversity is essential to recruiting and retaining top talent. Plus, it helps lenders establish trust with consumers. 

The Consumer Financial Protection Bureau released a report in 2017 examining why diversity in the mortgage industry is paramount. In part, it said that diversity creates space for perspectives that challenge “groupthink” among people with similar backgrounds. It helps companies tap into new market segments and develop innovative, financial products that meet the needs of customers across multiple demographics. 

And more diversity, at the executive and operations levels, lessens the chance a mortgage company will make tone-deaf statements that offend members of certain communities — a boon for any organization in the age of social media. 

Company leaders must shift their thinking and stop treating diversity as an industry buzzword that indicts or perceives it as an excuse for employees to bring up uncomfortable topics. Diversity is simply good business. 

I know this because I’ve seen it work. Each year, the National Association of Minority Mortgage Bankers of America — NAMMBA for short — hosts a conference, dubbed “CONNECT,” to bring together some of the biggest and brightest players in the mortgage space. 

The U.S. Census Bureau projects that by 2044, the nation’s minorities will become the majority, and rise to 56 percent of the total population by 2060, versus 38 percent in 2014. As the country’s racial makeup changes, so will the demographic makeup of homeownership. 

To maintain competitiveness and attract top talent, the mortgage industry should embrace and adapt to this change.