What type of consumer is currently on the hunt for home financing? And what can banks and credit unions to do stay on the pulse of their target audience in 2020? The truth is, the homebuying landscape looks a little different in 2020 than it might have looked five years ago. So what should financial institutions look out for?
Here are some key attributes of the 2020 mortgage customer to keep in mind.
One thing that hasn't seen a drastic shift since 2015 is the average age group of a homebuyer in the United States—millennials still comprise the largest swath of those seeking homeownership, with 37 percent of the total market, according to the National Association of Realtors. So whether your bank or credit union is pushing mortgage campaign materials primarily digitally at the moment or not, it's time to ensure your channel selection and messaging caters to this demographic—we're talking aspirational language that focuses on the benefits of homeownership.
The current state of the economy is perhaps giving many young buyers pause, which will likely have at least a temporary impact on the total number of homes financed in the coming year. But by most prognosticators, these recession jitters looks to be a short-term circumstance, with the Congressional Budget Office predicting a gradual growth back to normal economic numbers over a 10-year period. This means that in many housing markets, banking institutions are still in the position to maintain healthy financing numbers—but perhaps 2020 will benefit most from promoting mortgage refinances of new and existing customers and members to meet goals and expectations.
Due to this springtime dip of mortgage rates, consumers have become accustomed to seeing lower-than-average interest rates—and that expectation will likely hold as long as consumers are feeling the impact of COVID-19. This means that while the economy recovers, consumers may be more likely to bite on homeownership based on the positive outcomes of rate-shopping. Institutions may need to promote off-season and promotional rate offers to say in the conversation.
In 2020, you may find the majority of your millennial buyers are first-timers—perhaps more than ever. A study from Redfin found that, while in 2010 the average homeowner had been in their current residence for eight years, that number has increased to 13 years in late 2019. This trend toward staying in a home longer will likely impact the type of buyer you should be targeting. Consider this in your bank marketing, from the age groups your ad imagery caters to, to the places you choose to promote your mortgage products.