For years, “millennial” has been a loaded term. Older generations in particular tend to hear “millennial” and picture entitled teenagers with no inclination toward investment or future planning. And there’s some truth to that — thanks to a number of societal circumstances during millennials’ formative years (think the Great Recession, college tuition inflation and now, the COVID-19 pandemic), many millennials started adulthood a bit behind where their parents were at the same age, at least in terms of finances and lifestyle. So, in years past, millennials and mortgages weren't always a natural pair.
But now, millennials are all grown up. Born between 1981-1996, the youngest members of this generation are 26 years old, and the oldest are in their early forties. And thanks to favorable socioeconomic conditions in America during their birth-year range, they have surpassed the baby boomers as the largest generation.
As such, millennials currently have more spending power than any other generation, and that spending power aligns with common lifestyle changes for their age range. Many are beginning to get married, have children, and tire of the frustrations of long-term renting. Although they are known for changing companies and even careers much more often than any previous generation, many millennials now have enough workforce experience that their savings, credit scores, and overall financial health would support a first-time home purchase.
How can you, as a credit union with a large number of millennial members, start to encourage millennials towards home ownership? Here are four primary tactics that can assist you in reaching millennial members and driving mortgage volume.
1. Target messaging. Consider mortgage marketing campaigns that specifically engage millennials. Because many adults in this age group still consider home ownership unattainable, they may tune out traditional mortgage marketing materials.
2. Become a financial awareness resource. Step one is encouraging millennials to recognize that they can purchase a house. Step two is teaching them how. By creating a bank of resources for mortgage-seeking millennials, you can not only give them the confidence they need to move forward in the mortgage application process but can build their trust in your institution. Resource recommendations include information on different types of loans, down payments, and closing costs, and the mortgage and homebuying process in general.
3. Provide housing market education. Real estate conditions are always changing. Current inventory is very low, and interest rates are rising. That means millennials who are considering home ownership need to start preparing now. Educate your members on getting a bona fide pre-approval today so they can move swiftly when their dream house hits the market. If they aren’t ready to put in an offer immediately, the property is likely to go under contract very quickly.
4. Invest in your technology and your team; But don't forget the human touch. It’s well-known that millennials prefer self-service across the board, including when it comes to pre-approvals, real estate searches, and mortgage industry research, so it’s important that your credit union has the tech stack to allow them this independence, providing a full digital experience from a mortgage portal to calculators and rates on the website. However, your services can’t stop at cutting-edge technology. Millennials also value human interaction to address more complex issues or individual challenges. Don’t forget the importance of having real, knowledgeable, helpful people standing by to assist millennials (and every other generation) in their mortgage journeys.
Increasing supply constraints as well as the rising interest rate environment are likely to make 2022 a fast-paced, high-stakes year when it comes to homebuying. Ensure your millennials are prepared to make a move when the time is right, and turn to you for their mortgage needs by getting in front of their education and encouragement today.
Looking for budget-friendly support and expertise to help serve your millennial members? Consider partnering with a mortgage CUSO like TruHome.