For the 6th consecutive year, Millennials were the largest group of home buyers (38%) according to the NAR’s 2020 Home Buyer & Seller Generational Trends study. To give you a comparison — baby boomers only accounted for about 33% of U.S buyers. However, it isn’t simply a battle of the numbers. How they search and shop for a mortgage lender is where Millennials and Baby Boomers really begin to separate.
Baby Boomer vs. Millennial Borrowers
Ironically, when these studies come out about “Millennials” and real estate shopping — many do not feel like the term is the best fit or description. A good percentage of 29 to 36-year-olds only had a flip phone in their teen years. They didn’t have a smartphone until well into their adult lives. (For reference: the 1st iPhone came out in 2007.)
That said, the Millennial or “Xennial” generation has rooted technology into their everyday decision-making. When it comes to mortgage shopping, it’s no different. Their first action isn’t to get on the phone with a real estate agent or even call their parents — they Google it.
A few more stats:
- 86% of 18 to 34-year-olds shopped around for a loan — comparing apples-to-apples rates.
- 75% of 35 to 54-year-olds shopped around for a loan
- 55% of adults 55 and older shopped around for a loan
90% of prospective homebuyers will use online resources to research homes and learn about the entire mortgage process before they even speak to an agent, mortgage broker, or lender.
Millennials — The Comparison Shopper
Millennials have zero problem gathering multiple quotes from lenders vs. their Baby Boomer and Generation X predecessors. On average, Millennials got six quotes from lenders and mortgage brokers vs. an average of four by Gen X shoppers and three by Boomers. Sites like Yelp, Kayak, and even Amazon have satisfied the Millennial’s itch to compare products and services.
According to Redfin, even with 90% of Millennials still engaging with real estate agents — data shows that 73% of young sellers try to negotiate with the listing agent for a lower commission, compared to 44% of Gen-Xers and 24% of Boomers.
(Close to 63% of Millennials who tried to get a lower commission rate percent stated they were successful.)
Millennials Expect a Digital-First Mortgage Process
Whether it’s a preference for technological automation or the need to educate themselves, Millennials have evolved to ask more from mortgage brokers and lenders.
Here are a few of the demands:
- Smooth overall user experience with the use of technology
- Built trust through transparent pricing and fees
- Honest, transparent communication from mortgage professionals
- Access to educational tools — especially for customers with a longer lead time until the purchase
Here’s the summary: Millennials want a parallel track; they require a seamless process that (if possible) can be 100% online. With that, they’d like a mortgage product expert ready and able to step in to give some education should they have a question throughout the process.
Fairway Partners Stay Prepared for the Future
As more and more Millennials begin to occupy the market, you’ll need to become a transparent and attractive option. As a Fairway Wholesale Lending partner, you become equipped to expand in the digital landscape. Whether it’s e-signing contracts or providing your younger buyers with educational resources — we arm our partners with lighting turnaround times, client services, and products designed to thrive with every generation.
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