Tag: homeownership

The Experian Vision conference is an annual event hosted by the leader in global information services. Vision 2024, held in Scottsdale, Arizona, from May 20-23, gathered industry leaders, data experts, and business professionals to discuss the latest trends and innovations in data and analytics. Aligned with the theme of “Powering Opportunities,” Vision 2024 featured breakout sessions offering attendees valuable insights and strategies for using data to drive business growth and success. Here are the highlights from three of the sessions focused on housing topics. Two industry experts, Sam Khater, Chief Economist at Freddie Mac and Susan Allen, SVP of Product, Experian Housing, engaged in a lively and thought-provoking discussion. The program covered the current state of the mortgage market. Susan and Sam took turns presenting their findings, exchanging ideas, and sharing their perspectives about where lenders could see opportunity in the current challenging mortgage market. They identified these current challenges and opportunities for lenders and borrowers. The economy continues to expand at a solid growth rate. Consumer spending remains firm, and the labor market is tight. The healthy economy is causing inflation and interest rates to remain higher for longer. Home purchase demand is coming off cyclical lows, but home sales remain low with mortgage rates remain above 7%. Inventory is improving modestly, but it remains very low due to chronic undersupply. The dynamic of low home sales, and even lower supply will continue to pressure home prices to increase, especially given many borrowers are moving to more affordable markets more frequently than in the past. There are 46 million likely qualified non-homeowner consumers, of which 7 million appear ready for first time homeownership. Although affordability remains a significant challenge, there are geographic regions where aspiring first-time homeowners are finding better success. Lenders are pursuing data-driven, nuanced approaches to identify and successfully reach these consumers. Three recognized industry professionals headlined this panel discussion. Eric Czajka, VP of Governance and Oversight at Rocket Companies, Experian Housing’s Susan Allen, and Product Manager for Experian Housing, Angad Paintal, shared their insights with a review of recent innovations from Rocket, including specific Experian solutions that are supporting Rocket’s consumer engagement strategy. Lenders in attendance also learned the next steps they can take to win borrowers that ready to consider a refinance. Experian showcased what’s possible with the combination of multiple data sources in a user-friendly interface to help lenders prepare for a rate reduction, including the potential triggers for conventional refinance, VA refinance and FHA refinances. Each segment needs to move 50 basis points to make the possibility of a refinance reasonable for the borrower. Vision 2024 continued with a casual conversation between Newrez COO Joshua Bishop and Chris Travis, Software Sales Expert at Experian. Participants experienced a glimpse into recent developments in mortgage technology from the Newrez leader and how these advancements reflect the industry. The program featured an exchange of questions and answers centered around three crucial topics that have significant implications for housing industry growth and development. These include economic uncertainty (interest rates, refinances, and delinquency trends), government regulations and policies (Basel III, CFPB) and technology (big data and generative AI). The key takeaway from this session was that the mortgage industry is undergoing a tech revolution. Lenders and servicers are utilizing predictive models to assess risk and personalize communication, while generative AI streamlines document processing and provides a cleaner experience for internal and external users alike. Deep analytical tools provide a clearer picture of borrower finances and hardship resolutions. This technological embrace is transforming the mortgage process, making it faster, more efficient, and more accessible. Be part of the future at Vision 2025 Vision 2024 was a resounding success, bringing together our valued clients to share innovative ideas and forge new connections. We were thrilled by the thought-provoking discussions and the collaborative spirit that permeated the event. As we look ahead to next year's conference, we eagerly anticipate even more groundbreaking conversations and opportunities for growth. Don't miss out - secure your spot now and be part of the future at Vision 2025. Register now

Click here to watch our recent webinar on first-time homebuyers. The younger generations comprise nearly 70% of first-time homebuyers, according to recent Experian Mortgage research. Understanding the generational traits of first-time homebuyers, particularly motivated younger generations, is critical to building highly targeted marketing strategies. Gen Z and Gen Y are essential in the first-time homebuyer market and represent close to 40% of repeat buyers, indicating they consider homeownership important beyond just their first purchase. Generation Y borrowers lead the pack Generation Y borrowers see homeownership as part of the American Dream but have waited longer than previous generations to purchase their first home.1 Additionally, as digital natives, they have grown up in a world with online resources and digital tools, making the home buying process more convenient for them. They can effortlessly research homes, compare mortgage rates, and even complete paperwork without leaving their home – a time and cost-saving advantage. With their desire for stability and their technological proficiency, it comes as no surprise that Gen Y borrowers are at the forefront of the homebuying market, accounting for 52% of all first-time buyers. Keep your eye on the next wave: Generation Z borrowers Although Generation Z is the youngest group with both young adults and those entering adulthood, they should not be overlooked in the real estate market. Despite their age, Gen Z possesses characteristics and tendencies that make them legitimate potential first-time homebuyers. Having grown up in an era characterized by technical advancements and economic instability, Gen Z has observed various challenges, such as the impact of the 2008 financial crisis on their families. They have also witnessed their parents and older siblings navigating student loan debt and a volatile job market. As a result, Gen Z individuals tend to approach life decisions with a cautious mindset. However, it is important to note that Gen Z is a generation known for their ambition and determination. They have an entrepreneurial spirit. A strong desire for stability. According to a recent survey conducted by Chase2, homeownership holds an important place in the dreams of nearly 90% of Generation Z individuals. This unwavering aspiration for owning a home and increasing purchasing power establishes Generation Z as a significant influence in the real estate market. Market to each generation where they are most comfortable, for Y and Z it is online and on the go To get the attention of these younger generations, mortgage lenders must understand that for these groups, digital technology is the norm, integrated into all aspects of their lives. They rely heavily on social media, online reviews, and mobile apps for research and communication. Therefore, it is crucial for lenders to implement a marketing strategy that encompasses social media platforms and personalized email, and, increasingly, text communications, to resonate with the tech savvy nature of these generations. That said, there is nuance in every population, and we see this when observing communication preferences across generations. We know, for example, that first-time homebuyers are considerably more likely than the general public to respond to e-mail offers. Understanding communication preferences for each prospect is important for tailoring your omni-channel marketing approach. Growing up in a world where technology is constantly advancing, Generations Y and Z are accustomed to having immediate access to information and services at their fingertips. As a result, they expect an efficient mortgage lending process that uses online, smartphone-enabled tools and platforms. They count on the ability to complete applications and paperwork online, receive updates and notifications via email or text, and have access to resources and tools to track and manage their mortgage journey. Lenders embracing these realities about Gen Y and Gen Z and connecting with them where they are, will be better positioned to serve this demographic and grow their own business. For more information about the lending possibilities for first-time homebuyers, download our latest white paper. Download white paper 1 “Bank of America’s 2023 Homebuyer Insights Report Explores How Hopeful Buyers are Forging Ahead,” bankofamerica.com.  2 “Millennial and Gen Z Adults Still See American Dream Within Reach Despite Challenges,” chase.com.  

Current economic conditions present genuine challenges for mortgage lenders. In this environment, first-time homebuyers offer exciting, perhaps unexpected, business growth potential. Market uncertainties have kept potential borrowers anxious and on the sidelines. The Federal Reserve's recent announcement that interest rates will remain steady for now has added to borrower anxiety. First-time homebuyers are no exception. They are concerned about the “right” time to jump in, buy a home, and own a mortgage. Despite worries over high interest rates and low inventory, many first-time homebuyers are tired of waiting for rates to drop and inventory to blossom. First-time buyers are eager to explore all avenues necessary to achieve homeownership. They show a willingness to be flexible when it comes to finding a house, considering options like a fixer upper or expanding their search to more affordable locations. The desire to escape the uncertainty and financial burden of renting is a strong driving force for first-time buyers. They see homeownership as a way to establish stability and build equity for their future. Despite the obstacles renters face in the competitive housing market, these potential buyers are motivated. Lenders who take time to understand who these buyers are and what matters to them will be ahead of the game. Notwithstanding stubbornly high interest rates, first-time homebuyers historically have shown remarkable resilience amid market fluctuations. According to a recent deep dive by Experian Mortgage experts into the buying patterns of first-time homebuyers, this group made 35-48% of all new purchases and 8-12% of all refinances between July 2022 and September 2023. First-time buyers represent both immediate potential and long-term client opportunities. How can lenders attract first-time homebuyers and drive growth from this market? The first-time homebuyer market largely consists of individuals in their early 40s and younger, also known as Gen Y and Gen Z. Rising costs of renting a home frustrate these individuals who are trying to save money for a down payment on a house and ultimately, buy their dream home. They want to settle down and look ahead to the future. For mortgage lenders who focus on understanding this younger first-time buyer market and developing targeted business strategies to attract them, great growth potential exists. Often, younger people feel locked out of buying opportunities, which creates uncertainty and apprehension about entering the market. This presents mortgage industry professionals with an incredible opportunity to show their value and grow their client base. To attract this market segment, lenders must adapt. Lenders must develop a comprehensive picture of this younger generation. Who are they? How do they shop? Where do they want to live? What is their financial situation? What are their financial and personal goals?  Acknowledging difficulties in the housing market and showing them a well-conceived path forward to home ownership will win the day for the lender and the buyer. As interest rates are poised to decrease in 2024-2025, there is potential for a surge in demand from first-time homebuyers. Lenders should prepare for these potential buyers, now. It is crucial to reevaluate how to approach first-time buyers to identify new opportunities for expansion. Experian Mortgage examined first-time homebuyer trends to pinpoint prospects with good credit and provide analysis on potential areas of opportunity. For more information about the lending possibilities for first-time homebuyers, download our white paper. Download white paper

Today’s mortgage market is challenging. Mortgage lenders and servicers will need to focus on product expansion to continue to grow their business. In a recent Q&A session, Susan Allen, Head of Product for Experian Mortgage, shared best practices for leveraging data for profitable growth.Q: At a high level, how can mortgage lenders and servicers grow their businesses?A: There are a lot of options to increase pipeline. One best practice we’re seeing now is to consider expanding both your product suite and your footprint. Very few lenders offer a comprehensive set of solutions in a national footprint. But demand is strong for solutions that go beyond traditional 30-year fixed-rate mortgages, including options to tap home equity. These types of products can help you grow your business by exposing you to new borrowers and broadening your relationships with clients. For example, we see several clients, even non-banks, venturing into credit cards and personal loans to meet their customers’ broader financial needs.Q: You mentioned demand for home equity solutions is strong. What should lenders consider when it comes to home equity loan growth strategies?A: The current record level of untapped equity makes home equity lines of credit (HELOCs) attractive for borrowers to use for debt consolidation, remodeling or to add to their rainy-day fund. For lenders to decide whether HELOCs would be profitable for their business, they should look broadly at data about borrowers, volumes and indicators of profitability, such as credit lines and utilization.Q: It’s one thing to talk about the HELOC market, but does Experian have any home equity data to show what’s happening in this space?A: Absolutely. We’re seeing several things when it comes to home equity data. First, HELOC volumes have doubled since January 2021, which indicates strong borrower interest. Second, we know that home prices are at record highs across the board, and we see this record of “tappable” equity translating into credit lines well over $100,000. What’s more, we’re seeing borrowers drawing down consistently at $37,000 on average, which is a healthy and profitable utilization rate. Lastly, greater than 90% of HELOC borrowers have a prime or super prime credit score. Our data shows HELOC borrowers have higher credit scores than new purchase borrowers. Additionally, conventional wisdom says that HELOCs are for seasoned homeowners, but according to the data, the younger generation of homeowners has tripled their HELOC originations. I’ve been in this industry for a long time, and to be honest, this shocked me. This makes it clear that it’s always important (especially for industry veterans) to constantly update our understanding of current market dynamics. Q: Wow, it sounds like expansion into home equity solutions is a no-brainer. What am I missing? A: HELOCs are a strong and growing market segment. But it’s not sufficient to look only at opportunity. We must also use the best data at our disposal to evaluate risk. With HELOC performance impacted by property values, recent concern over the stability of home prices is causing some lenders to pause. Clients tell us they would like to expand their HELOC offerings but aren’t sure when or where to start. Q: So, what’s the answer here?A: Data is key to taking the guesswork out of decisions. When it comes to HELOC expansion, lenders voice concern specifically about home price forecasts. Although it is notoriously hard to forecast home prices, you can use actual, current data to inform decisions about where and when to expand a home equity portfolio. For example, lenders can use listing data to gauge markets shifting from a “seller’s market” to a “buyer’s market.”Q: Susan, this has been a great discussion. Any final thoughts? A: As I’ve shared, great opportunities exist. With best-in-class data and analytics, lenders can find these opportunities and propel their businesses forward. Be sure to read the other blog posts in this series:Getting Ahead with a Proactive Mortgage Outreach and Engagement StrategyLead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy To learn about Experian Mortgage solution offerings, click here.

There are many facets to promoting a more equitable society. One major driver is financial inclusion or reducing the racial wealth gap for underserved communities. No other tool has impacted generational wealth more than sustainable homeownership. However, the underserved and underbanked home buyers experience more barriers to entry than any other consumer segment. It is important to recognize the well-documented racial and ethnic homeownership gap; doing so will not only benefit the impacted communities, but also elevate the level of support of those lenders who serve them. What are we doing as an industry to reduce this gap? Many organizations are doing their part in removing barriers to homeownership and systemic inequities. In 2021, the FHFA published their Duty to Serve 2021 plans for Fannie Mae and Freddie Mac to focus on historically underserved markets. A part of this plan includes increasing liquidity of mortgage financing for lower- and moderate-income families. Fannie Mae and Freddie Mac each announced individual refinance offerings for lower-income homeowners – Fannie Mae’s RefiNow™ and Freddie Mac’s Refi PossibleSM. Eligible borrowers meet requirements including income at or below 100% area median income (AMI), a minimum credit score of 620, consideration for loans in forbearance and additional newly expanded flexibilities. As part of the plan, lenders will lower a borrower’s monthly payment by at least a half a percentage point reduction in their interest rate, which can translate into hundreds of dollars of savings per month and sustain their homeownership. Experian has the tools to help mortgage lenders take advantage of this offering  As a leader in data, analytics and technology, we have the tools needed to help lenders recognize opportunities to be inclusive and identify borrowers who may be eligible for Fannie Mae’s and Freddie Mac’s lower-income refinance offerings. To illustrate, we performed a data study and identified over 6M eligible mortgages nationwide (impacting over 8M borrowers) for this plan, and some lenders had as much as 30% of mortgages in their portfolio eligible with lower- and moderate-incomes.1 These insights can have a positive impact on the borrowers you serve by promoting more inclusion and benefit lenders through improved customer retention, strengthened customer loyalty and an opportunity to continue to build generational wealth through housing. We are committed to enabling the industry's DEI evolution As the Consumer’s bureau, empowering consumers is at the heart of everything we do. We’re committed to developing products and services that increase credit access, greater inclusion in homeownership and narrowing the racial wealth gap. Below are a few of our recent initiatives, and be sure to check out our financial inclusion resources here: United for Financial Health: Promotes inclusion in underserved communities through partnerships and have committed to investing our time and resources to create a more inclusive tomorrow for our communities. Project REACh (Roundtable for Economic Access and Change): brings together leaders from banking, business, technology, and national civil rights organizations to reduce barriers that prevent equal and fair participation in the nation’s economy, and we are engaged with the Alternative Credit Scoring Utility group as part of this initiative. Operation Hope: Empowers youth and underserved communities to improve their financial health through education, so they can thrive (not just survive) in the credit ecosystem so they can sustain good credit and responsibly use credit. DEI-Centric Solutions: From Experian Boost to our recent launch of Experian Go, we offer a variety of consumer solutions designed to empower consumers to gain access to credit and build a brighter financial future. What does this mean for you? Our passion, knowledge and partnerships in DEI have enabled us to share best practices and can help lenders prescriptively look at their portfolios to create inclusive growth strategies, identify gaps, and track progress towards diversity objectives. The mortgage industry has a unique opportunity to create paths to homeownership for underserved communities. Together, we can drive impact for generations of Americans to come. Let’s drive inclusivity and revive the American dream of homeownership. 1Experian Ascend™ as of November 2021

Rays of hope are beginning to shine in the economy that suggest the U.S. may have moved beyond the most acute phase of the economic crisis. The housing sector, in particular, looks poised to regain momentum and perhaps lead the path towards stabilization in the second half of 2020. A “V-Shaped” rebound in mortgage applications Despite record levels of unemployment and widespread economic uncertainty, homebuyers have returned to the market with conviction. After shelter-in-place restrictions curtailed open-house visits and crimped buyer demand in early April, applications to purchase a home have risen for six consecutive weeks, according to the Mortgage Bankers Association. The latest data for the week of May 22nd, indicate that purchase applications were 9% higher than during the same period in 2019. If this trend continues, it will show that significant pent-up demand exists in the housing market that may be able to offset some of the lost spring buying season. April new home sales far exceed expectations After declining by 13.7% in March, new home sales rose a modest 0.6% in April. While this was only a slight gain, it was considerably above economists’ projections of a fall of 20% and may mark the turning point in the downtrend. Since the recording of new home sales data occurs when the purchase contract is signed or a deposit is accepted – and is typically for a house that hasn’t been built yet or is currently under construction – it provides a gauge of how buyers feel about their future economic prospects. Building a home also requires hiring new construction workers, buying building supplies, and supporting a host of ancillary industries, thus making it an indicator of further economic activity. Some of the increase in demand for new homes may have been driven by coronavirus quirks. The number of existing homes on the market is at record lows and many people may have been reluctant to put their home up for sale and have buyers tour as health concerns remain. Buyers, as well, may have preferred to steer clear of occupied homes or were unable to make in-person visits due to shelter-in-place restrictions. This lack of options for home buyers, coupled with record-low mortgage rates, likely drove sales of new homes higher. However, for the same reasons why new home sales rose, pending sales for existing homes fell sharply. In April, the National Association of Realtors reported that sales declined by 21.8%, which is the largest drop in ten years. Home prices continue to gain ground Even with shelter-in-place restrictions dampening buyer demand in early April, home values have continued to rise. This is because the supply of homes on the market also contracted, resulting in a simultaneous drop of demand and supply.  According to Zillow Research, the total inventory of homes for sale is down roughly 20% from this time last year. With fewer competing homes on the market, sellers have been reluctant to slash prices and are betting that the lack of options and low mortgage rates will keep buyers on the hook. In April, U.S. home values rose 4.3% from the year before. The states with the strongest growth were Idaho (9.8%), Arizona (8.5%), Maine (7.6%), and Washington (7.4%). It will be interesting to see if this pattern of growth changes as newly implemented work from home policies may shift where people prefer to live and work. Why it matters The housing market has an outsized influence on the overall direction of the U.S. economy. Housing is not only is a big contributor to economic growth, but many owners have a large portion of their wealth tied up in their home. If the housing market can find its footing in the second half of 2020, then it could set the stage for an eventual economic recovery. Learn more

Much has been written about Millennials over the past few years, and many continue to speculate on how this now largest living generation will live, age and ultimately change the world. Will they still aspire to achieve the “American Dream” of education, home and raising a family? Do they wish for something different? Or has the “Dream” simply been delayed with so many individuals saddled with record-high student loan debt? According to a recent study by Pew, for the first time in more than 130 years, adults ages 18 to 34 were slightly more likely to be living in their parents’ home than they were to be living with a spouse or partner in their own household. It’s no secret the median age of first marriage has risen steadily for decades. In fact, a growing share of young adults may be eschewing marriage altogether. Layer on the story that about half of young college graduates between the ages of 22 and 27 are said to be “underemployed”—working in a job that hasn’t historically required a college degree – and it’s clear if nothing else that the “American Dream” for many Millennials has been delayed. So what does this all mean for the world of homeownership? While some experts warn the homeownership rate will continue to decrease, others – like Freddie Mac – believe that sentiment is overly pessimistic. Freddie Mac Chief Economist Sean Becketti says, “The income and education gaps that are responsible for some of the differences may be narrowed or eliminated as the U.S. becomes a 'majority minority' country.” Mortgage interest rates are still near historic lows, but home prices are rising far faster than incomes, negating much of the savings from these low rates. Experian has taken the question a step further, diving into not just “Do Millennials want to buy homes” but “Can Millennials buy homes?” Using mortgage readiness underwriting criteria, the bureau took a large consumer sample and assessed Millennial mortgage readiness. Experian then worked with Freddie Mac to identify where these “ready” individuals had the best chance of finding homes. The two factors that had the strongest correlation on homeownership were income and being married. From a credit perspective, 33 percent of the sample had strong or moderate credit, while 50 percent had weak credit. While the 50 percent figure is startling, it is important to note 40 percent of that grouping consisted of individuals aged 18 to 26. They simply haven’t had enough time to build up their credit. Second, of the weak group, 31 percent were “near-moderate,” meaning their VantageScore® credit score is 601 to 660, so they are close to reaching a “ready” status. Overall, student debt and home price had a negative correlation on homeownership. In regards to regions, Millennials are most likely to live in places where they can make money, so urban hubs like Los Angeles, San Francisco, Chicago, Dallas, Houston, Boston, New York and DC currently serve as basecamp for this group. Still, when you factor in affordability, findings revealed the Greater New York, Houston and Miami areas would be good areas for sourcing Millennials who are mortgage ready and matching them to affordable inventory. Complete research findings can be accessed in the Experian-Freddie Mac co-hosted webinar, but overall signs indicate Millennials are increasingly becoming “mortgage ready” as they age, and will soon want to own their slice of the “American Dream.” Expect the Millennial homeownership rate of 34 percent to creep higher in the years to come. Brokers, lenders and realtors get ready.