Tag: housing market
As the U.S. rental housing market moves through 2026, renters, landlords, and property management companies face an increasingly complex operating environment. Elevated housing costs, economic uncertainty, slowing construction activity, and a rapidly evolving fraud landscape are converging to reshape both risk and opportunity across the rental ecosystem. At the same time, advances in data, analytics, and verification technologies are equipping housing professionals with new tools to adapt — shifting decision‑making from reactive to proactive at a moment when precision matters most. Mortgage rates continue to constrain housing mobility One of the most significant structural forces supporting rental demand remains the cost of homeownership. In early 2025, the average 30‑year fixed mortgage rate hovered near 7%, with Freddie Mac’s weekly survey reporting a rate of 7.04% for the week of January 16, 2025. The report also showed the year beginning near 7% before ending at 6.15% (Freddie Mac, 2025a, 2025b). This environment has created a pronounced lock‑in effect: homeowners with pandemic‑era low fixed mortgage rates are reluctant to sell, limiting for‑sale inventory and suppressing turnover (Federal Housing Finance Agency [FHFA], 2024; Bankrate, 2025). For renters, this results in longer tenures and fewer pathways to homeownership. For landlords and lenders, it reinforces expectations that rental demand will remain elevated well into 2026, even if mortgage rates ease modestly. Rental housing supply faces structural constraints Despite strong rental demand, rental housing supply growth remains uneven. Multifamily development has slowed as financing costs and construction expenses have risen. Industry data indicate that multifamily units under construction fell roughly 20% year over year by early 2025, while completions have outpaced new starts—approximately 1.5 apartments completed for every one that begins construction on a three‑month moving‑average basis (Nanayakkara Skillington, 2025). Forecasts from Yardi Matrix pointed to elevated completions in 2025, followed by a notable slowdown in 2026, with starts continuing to slump (Dale, 2025). Absent a meaningful acceleration in new construction, these dynamics are likely to sustain pressure on rents and intensify affordability challenges, particularly in high‑growth and high‑migration markets (Joint Center for Housing Studies, 2025). Fraud risk is escalating in a digital-first rental market As rental transactions increasingly move online, fraud has become a fast‑growing operational risk for property managers and owners. The Federal Trade Commission’s Consumer Sentinel data show sustained reports of identity theft and imposter scams (Federal Trade Commission [FTC], 2024), while industry surveys identify account takeover, payment fraud, and synthetic identities as some of the most frequently encountered issues (Experian, 2023). From 2024 to 2025, housing and real estate professionals reported rising exposure to AI‑enabled schemes—including deepfake voices, manipulated documents, and increasingly sophisticated application fraud (Housing Wire, 2025; Veriff, 2025; First American, 2025). As digital leasing accelerates, robust identity verification and fraud prevention have become core components of sustainable portfolio management. FTC Consumer Sentinel data continue to highlight persistent patterns of identity theft and imposter scams (FTC, 2024), and industry research consistently shows that account takeover, payment fraud, and synthetic identities remain significant operational threats (Experian, 2023). Between 2024 and 2025, housing professionals noted a growing prevalence of AI‑enabled fraud techniques, such as deepfake audio, falsified documents, and advanced application manipulation (HousingWire, 2025; Veriff, 2025; First American, 2025). Data and analytics are becoming the defining advantage Access to high‑quality data and real‑time insights is increasingly decisive. Data‑driven solutions enable rental housing professionals to move beyond static screening and manual processes, supporting continuous risk assessment and smarter decision‑making. These capabilities allow housing providers to evaluate applicants and portfolios with greater accuracy, reduce operational friction, and respond more proactively to emerging risks—making data and analytics a defining advantage across the rental housing ecosystem. Rent reporting as a credit building and risk signal building and risk signal Rental payment history has emerged as a valuable indicator of consumer financial behavior. Surveys and evaluations show strong renter interest in having on‑time rent payments included in credit scores, and many participants experience measurable benefits. For example, Fannie Mae reports that more than 80% of renters want rent payments factored into credit scoring models (Fannie Mae, n.d.). Randomized trials also demonstrate increased credit visibility and movement into near‑prime tiers for previously unscorable consumers (Theodos, Teles, & Leiberman, 2025; Credit Builders Alliance, 2025). For property managers and owners, this creates a dual benefit: renters gain meaningful credit‑building opportunities, while housing providers gain a deeper, more reliable signal of payment behavior beyond traditional credit files. Smarter screening and verification Income and employment verification remain among the most critical—and historically inefficient—steps in the rental lifecycle. Digital verification tools that leverage payroll and employment databases, along with consent‑based bank data, significantly reduce friction, deliver faster decisions, and help mitigate fraud by validating applicant information at the source (Truework, 2024; MeasureOne, n.d.; U.S. Government Accountability Office [GAO], 2025). As application volumes rise, automated verification is becoming a baseline requirement rather than a competitive differentiator. These tools enhance accuracy, streamline workflows, and strengthen fraud prevention—capabilities that are increasingly essential as application tactics grow more advanced. What to watch as the market moves into 2026 Looking ahead, three trends are likely to shape the rental housing market over the next 12 to 18 months: Sustained rental demand amid elevated mortgage rates and constrained for‑sale inventory, as higher borrowing costs continue to limit mobility and suppress housing turnover (Freddie Mac, 2025a; Federal Housing Finance Agency [FHFA], 2024). Widening affordability gaps, with rent‑to‑income pressures intensifying—particularly in high‑cost and high‑growth regions (Joint Center for Housing Studies, 2025). Data‑driven decision‑making is becoming standard across screening, pricing, fraud prevention, and portfolio monitoring, reflecting broader industry adoption of automated tools and analytics (U.S. Government Accountability Office [GAO], 2025; Snappt, 2025). Final perspective The U.S. rental housing market in 2026 is defined by both complexity and opportunity. Success will depend on the ability to adapt quickly, manage risk proactively, and deploy data‑driven solutions with precision. For renters, tools such as rent reporting offer pathways to greater financial stability and transparency. Ultimately, this moment is about resilience, readiness, and the systems that will shape rental housing outcomes well into the next cycle. Organizations that invest now in smarter data, stronger controls, and forward‑looking strategies will be best positioned to navigate what comes next—for themselves and for the broader rental housing ecosystem.
Mortgage rates remain elevated by historical standards: the average 30-year fixed rate ended 2025 at 6.15% (Freddie Mac’s PMMS), after spending much of the year closer to 7% (52-week high ≈ 7.04%) (Freddie Mac, 2025; Mortgage News Daily, 2025). At the same time, the Federal Reserve’s December 2025 Summary of Economic Projections signaled a modest easing path into 2026 (median fed funds projection 3.4% at end-2026), reinforcing expectations of lower borrowing costs ahead rather than an immediate return to pre-2022 conditions (Federal Reserve, 2025). Affordability pressures persist and vary widely by metro and region: rent-to-income ratios in many Midwestern markets are below 30%, while parts of the Northeast (e.g., New York City) exceed 50% of income for a typical renter household (Moody’s Analytics, 2023; 2025). Given this fragmentation, national averages no longer provide sufficient guidance. Lenders need a data-driven playbook that translates insight into action across the lending lifecycle. Pillar 1: Borrower insights Today’s renter profile skews younger: Gen Z already accounts for ~30.5% of renters and, together with younger millennials (under 35), represents over half of the rental population (Experian, 2025). Zillow’s Consumer Housing Trends Report similarly shows Gen Z makes up 25% of all renters and 47% of recent movers—evidence that the next cohort of first-time buyers is emerging from today’s rental pool (Zillow Research, 2024). Traditional credit files can miss reliable payment behavior. Both Fannie Mae and Freddie Mac now consider positive rent payment history in automated underwriting—using bank or payroll-verified data to augment limited credit histories—improving access for qualified renters (Fannie Mae, 2025; Freddie Mac, 2025). Data-driven edge: Broader borrower views—incorporating verified rent payments, student loan performance, and alternative credit signals—help identify “hidden prime” consumers and responsibly expand the addressable market. Pillar 2: Operational efficiency Margin pressure is persistent, and manual income/employment verification remains a top pain point: manual methods can take 30 minutes to several days, raise costs, and increase drop-offs (MeridianLink, 2025). Modern VOE/VOI solutions—e.g., Mastercard Open Finance (Finicity/Argyle), Truework—deliver GSE-accepted digital verifications that reduce friction, lower per-loan costs, and provide rep/warranty relief when validations succeed ( Mastercard; Business Wire/Morningstar). Data-driven edge: Verification and documentation automation enables speed, consistency, and scalability without proportional staffing or risk increases. Pillar 3: Geographic precision Affordability is deeply local. The national rent-to-income ratio has recently eased back toward ~27–30%, but disparities persist: several Midwest markets track below 30%, while New York City reaches ~67% and Miami exceeds 40% (Moody’s Analytics, 2023; 2025). Recent rent reports also show metros like Miami ranking as least affordable and others (e.g., Austin) more affordable for typical renter incomes, underscoring the need for metro-level targeting (Realtor.com, 2025). Data-driven edge: Market-level data—local affordability, migration, inventory, and labor trends—helps focus growth where demand is most likely to convert and perform over time. Pillar 4: Refinance readiness Refinance activity is muted but not gone. With rates dipping from 2025 highs, millions are positioned to benefit: as of Nov. 2025, about 4.1 million mortgage holders were “in the money” (≥ 75 bps savings), including 1.7 million highly qualified candidates; the cohort could grow toward ~5 million with small additional rate declines (ICE Mortgage Technology, 2025). Homeowners also held $11.2 trillion in tappable equity entering Q4 2025, supporting additional refinance and home-equity lending opportunities (ICE Mortgage Technology, 2025). Data-driven edge: Segment portfolios by rate sensitivity, pre-model operational capacity, and streamline digital processes to capture volume quickly while preserving experience. Bringing it together These four pillars—borrower insights, operational efficiency, geographic precision, and refinance readiness—form a unified framework for outperforming peers in today’s housing market. Lenders that operationalize this approach will be better positioned to: • Serve more borrowers responsibly by leveraging verified rent and payroll data to expand access (Fannie Mae; Freddie Mac). • Manage risk with greater precision through automated verifications and underwriting validations (Mastercard). • Build sustainable regional strength by deploying resources in metros where affordability and demand align (Moody’s; Realtor.com). • Capture refinance demand at scale as candidates and tappable equity expand when rates ease (ICE Mortgage Technology). The housing market is shifting—not back to what it was, but toward something more fragmented and data-dependent. Lenders who build strategy on insight rather than instinct will define the next generation of market leaders. References Experian. (2025, January 10). The shifting demographics of today’s renters. https://www.experian.com/blogs/insights/the-shifting-demographics-of-todays-renters/ Federal Reserve Board. (2025, December 10). Summary of Economic Projections (Table PDF). https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20251210.pdf Freddie Mac. (2025, December 31). Primary Mortgage Market Survey® (PMMS®) weekly data. FRED series MORTGAGE30US. https://fred.stlouisfed.org/series/MORTGAGE30US/ Fannie Mae. (2025, January). FAQs: Positive rent payment history in Desktop Underwriter. https://singlefamily.fanniemae.com/originating-underwriting/faqs-positive-rent-payment-history-desktop-underwriter ICE Mortgage Technology. (2025, November 10). November 2025 Mortgage Monitor (press release & report). https://mortgagetech.ice.com/resources/data-reports/november-2025-mortgage-monitor Mastercard. (2024, June 25; updated September 23, 2024). How data-enabled income and employment verifications deliver smarter, seamless financial experiences. https://www.mastercard.com/us/en/news-and-trends/Insights/2024/data-enabled-income-and-employment-verifications-deliver-smarter,-seamless-financial-experiences.html MeridianLink. (2025, April 8). Instant verification: Rethinking income and employment tools. https://www.meridianlink.com/blog/its-time-to-take-a-new-look-at-income-and-employment-verification-tools/ Moody’s Analytics. (2023, November 27). 30% of income on rent remains the norm in U.S. metros (Data story). https://www.moodys.com/web/en/us/insights/data-stories/q3-2023-us-rental-housing-affordability.html Moody’s CRE. (2025, March 11). Q4 2024 housing affordability update. https://www.moodyscre.com/insights/cre-trends/q4-2024-housing-affordability-update/ Mortgage News Daily. (2026, January 2). Freddie Mac mortgage rates—weekly survey (historic table). https://www.mortgagenewsdaily.com/mortgage-rates/freddie-mac Realtor.com Economics. (2025, October 14). September 2025 rental report: Rental affordability improved compared to a year ago. https://www.realtor.com/research/september-2025-rent/ Zillow Research. (2024, October 14). Renters: Results from the Zillow Consumer Housing Trends Report 2024. https://www.zillow.com/research/renters-housing-trends-report-2024-34387/
As the U.S. housing market enters a new phase, the 2026 State of the U.S. Housing Market Report from Experian provides a data-driven overview for lenders, servicers, and property managers. This article synthesizes findings related to mortgage originations, affordability pressures, home equity utilization, credit risk, and generational sentiment, with implications for lender strategy in 2026 (Experian, 2026). Mortgage market in flux: Opportunity amid transition The mortgage market presents mixed signals. Rate moderation in late 2025 contributed to renewed demand, while the product mix continued to evolve. Conventional loans remained dominant at approximately 72% of originations, yet Veterans Affairs (VA) loans experienced the highest growth between 2023 and 2025, reaching 10.8% market share (Experian, 2026). At the same time, second mortgages and home equity lines of credit (HELOCs) gained momentum as homeowners sought liquidity without refinancing out of historically low interest rates. This trend reflects growing demand for equity-based solutions that preserve favorable first-mortgage terms (Experian, 2026). Pull-through challenges: Only 34% of inquiries become loans Conversion efficiency remains a key challenge. Only 34% of first-mortgage hard credit inquiries resulted in a completed mortgage origination, highlighting friction between borrower interest and loan fulfillment (Experian, 2026). Consumer research reinforces this gap. In an Experian survey, 50% of respondents reported that understanding what they could qualify for would be the most helpful step in their homeownership journey, suggesting that improved prequalification tools could materially increase pull-through rates (Experian, 2026). Affordability pressure goes beyond the mortgage Between 2021 and 2025, property taxes increased by 15.2%, while non-tax escrow costs—primarily homeowners' insurance—rose by 67.4% nationwide (Experian, 2026). State-level variation further complicates affordability assessments. Florida recorded the highest average non-tax escrow expenses at $430 per month largely due to sharp increase in home insurance costs. California, by contrast, exhibited the highest average property tax burden at $626, largely driven by elevated home values despite lower statutory tax rates (Experian, 2026). These dynamics underscore the importance of holistic cost modeling, particularly for first-time buyers. Home equity: A lender’s growth frontier Home equity remains a significant growth opportunity. An estimated 96.2 million consumers reside in owner-occupied homes, with substantial portions owning their homes outright or holding more than 20% equity (Experian, 2026). HELOC usage is increasing, particularly among younger borrowers, 50% of whom utilize more than 60% of their available HELOC credit, compared with 36% of older borrowers (Experian, 2026). Market share shifts are also notable. Fintech lenders experienced a 140.2% increase in HELOC originations from 2023 to 2025, significantly outpacing banks and credit unions. These gains suggest that digital-first experiences and streamlined workflows are increasingly decisive factors for borrowers (Experian, 2026). Risk and resilience: What credit and property data reveal Overall delinquency rates eased slightly; however, near-prime and prime borrowers demonstrated early signs of stress, particularly within first-mortgage portfolios (Experian, 2026). Property-level risk is also intensifying. Flood exposure increased by 3.7% nationally, with 26.4% of Florida homes identified as at risk. Rising exposure has contributed to escalating insurance costs, further affecting affordability and credit performance (Experian, 2026). From a credit hierarchy perspective, secured debt—especially mortgages and auto loans—continued to show the lowest delinquency rates. In contrast, student loans and credit cards exhibited higher delinquency risk, particularly among financially constrained renters and homeowners (Experian, 2026). Generational optimism versus macroeconomic constraints Despite affordability headwinds, consumer optimism persists. Approximately 47% of renters believe they will be ready to purchase a home within four years, increasing to 67% within eight years (Experian, 2026). Structural constraints remain significant. Roughly 70% of homeowners hold mortgage rates below 6%, contributing to limited housing inventory as current owners remain rate-locked. With 30-year mortgage rates still above that level and a softening labor market, even modest increases in unemployment could further pressure affordability (Experian, 2026). Implications for lenders Experian’s analysis highlights several strategic priorities for housing industry stakeholders: Expand access to credit. Incorporate alternative data sources, such as cash-flow analytics and rental payment history, to responsibly extend credit to underserved but qualified borrowers (Experian, 2026). Capitalize on equity demand. Develop HELOC offerings that are fast, flexible, and digitally enabled to meet the needs of equity-rich, rate-locked homeowners (Experian, 2026). Enhance risk precision. Integrate credit, property, and behavioral data to identify emerging risk early, particularly among near-prime segments, and to support more accurate pricing and portfolio management (Experian, 2026). Conclusion The 2026 housing market reflects a complex interplay of macroeconomic pressure, shifting borrower behavior, and growing reliance on home equity solutions. Agility and data-driven decision-making will be essential for lenders navigating this environment. The 2026 State of the U.S. Housing Market Report offers critical insight to support growth while managing risk in an evolving landscape (Experian, 2026). 📘 Access the full report here: Experian 2026 State of the U.S. Housing Market Report References Experian. (2026). 2026 state of the U.S. housing market report. Experian.
Executive Summary The July 2025 housing market reveals a landscape of shifting consumer behaviors, evolving lender strategies, and continued strength in borrower performance—especially within home equity. Origination volumes have dipped slightly, but direct marketing, particularly through Invitation to Apply (ITA) campaigns, is accelerating. As key players exit the space, gaps are opening across both marketing and origination, creating clear opportunities for agile institutions. This phase signals both caution and potential. The winners will be those who refine their marketing, sharpen segmentation, and deploy smarter risk monitoring in real time. TL;DR Risk Profile: Mortgage and HELOC delinquencies remain low. Slight increases in 90+ DPD are not yet cause for concern. Mortgage Originations: Modestly down, but marketing remains aggressive. Invitation to Apply (ITA) volumes outpacing prescreen. Home Equity Originations: Stable originations, competitive marketing volumes. ITA volumes outpacing prescreen similar to mortgage. Opportunity: Targeted direct mail and refined segmentation are growth levers in both mortgage and home equity. Risk Environment: Resilient Yet Watchful Experian’s July data shows both mortgage and home equity delinquencies hovering at historically low levels. Early-stage delinquencies dropped in June, while late-stage (90+ days past due) nudged upward—still below thresholds signaling broader distress. HELOCs followed a similar path. Early-stage movement was slightly elevated but well within acceptable ranges, reinforcing borrower stability even in a high-rate, high-tariff environment. Takeaway: Creditworthiness remains strong, especially for real estate–backed portfolios, but sustained monitoring of 90+ DPD trends is smart risk management. Home Equity: Volume Holds, Competition Resets Home equity lending is undergoing a major strategic reshuffle. With a key market participant exiting the space, a significant share of both marketing and originations is now in flux. What’s happening: Direct mail volumes in home equity nearly match those in first mortgages—despite the latter holding larger balances. ITA volumes alone topped 8 million in May 2025. Total tappable home equity stands near $29.5 trillion, underscoring a massive opportunity.(source: Experian property data.) Lenders willing to recalibrate quickly can unlock high-intent borrowers—especially as more consumers seek cash flow flexibility without refinancing into higher rates. Direct Mail and Offer Channel Trends The continued surge in ITA campaigns illustrates a broader market pivot. Lenders are favoring: Controlled timing and messaging Multichannel alignment Improved compliance flexibility May 2025 Mail Volumes: Offer Type Mortgage Home Equity ITA 29.2M 25.8M Prescreen 15.6M 19.0M Strategic Insights for Lenders 1. Invest in Personalized Offers Drive better response rates with prescreen or ITA campaigns. Leverage data assets like Experian ConsumerView for ITA’s for robust behavioral and lifestyle segmentation. For prescreen, achieve pinpoint-personalization with offers built on propensity models, property attributes, and credit characteristics. 2. Seize the Home Equity Opening Use urgency-based messaging to attract consumers searching for fast access to equity—without the complexity of a full refi. Additionally, as mentioned above, leverage propensity, credit, and property (i.e. equity) data to optimize your marketing spend. 3. Strengthen Risk Controls Even in a low-delinquency environment, vigilance matters. Account Review campaigns, custom scorecards, and real-time monitoring help stay ahead of rising 90+ DPD segments. 4. Benchmark Smarter Competitive intelligence is key. Evaluate offer volumes, audience segmentation, and marketing timing to refine your next campaign. FAQ Q: What does the exit of a major home equity player mean? A: It leaves a significant gap in both marketing activity and borrower targeting. Lenders able to act quickly can capture outsized share in a category rich with equity and demand. Q: How should lenders respond to the evolving risk profile? A: Continue to monitor performance closely, but focus on forward-looking indicators like trended data, income verification, and alternative credit signals. Conclusion The housing market in July 2025 presents a clear message: the fundamentals are sound, but the strategies are shifting. Those ready to optimize outreach by making smarter use of data will seize a disproportionate share in both mortgage and home equity. Want to stay ahead? Connect with Experian Mortgage Solutions for the insights, tools, and strategies to grow in today’s evolving lending environment.
First mortgage delinquencies and foreclosures are increasing, particularly in later stages of delinquency. Home equity delinquencies remain low, signaling stability in that segment. Mortgage originations are up, with refinances beginning to recover. HELOC direct mail offers have surpassed first mortgage offers, driven by aggressive marketing and AVM-based personalization. Lenders using property data in marketing outperform peers relying on volume alone. Strategic focus for lenders: tighten risk analytics, integrate data into marketing, and adopt AVM-based personalization.
In 2024, the housing market defied recession fears, with mortgage and home equity growth driven by briefly lower interest rates, strong equity positions, generally positive economic indicators, and stock market appreciation. This performance is notable because, in 2023, economists’ favorite hobby was predicting a recession in 2024. Following a period of elevated inflation, driven largely by loose monetary policy, expansionary fiscal policy, and supply chain disruptions brought on by COVID, economists were certain that the US economy would shrink. However, the economy continued outperforming expectations, even as unemployment rose modestly (Figure 2) and inflation cooled (Figure 3). Source: FRED (Figure 1, Figure 2, Figure 3). So, a good economy is good for the mortgage and home equity markets, right? Generally speaking, this statement was true. As monitored by Experian’s credit database, mortgage originations increased by approximately thirty percent year over year as of November 2024 (Figure 4), and Q3 ’24 pre-tax profit for Independent Mortgage Banks (IMBs) averaged $701 per loan.1 So, business in home lending is good — certainly better than it was during the period when the Fed was raising rates, origination volumes shrank as opposed to grew, and IMB profit per loan turned negative. Source: Experian Ascend Insights Dashboard. What constituted this growth in mortgage lending? As we all know, the Fed has lowered interest rates by 100bps since they started reducing rates in September. The market had priced in the September cut weeks prior to the actual announcement (Figure 5), and the market enjoyed a spike in refinance volume as a result (Figure 6). However, in the lead-up to and following the US presidential election, interest rates spiked back up due to the market’s expectations around future economic activity, which will dampen pressure on refinance volumes even after the recent additional rate drop. The impact of further rate drops on mortgage rates is unclear, and refinance volume still constitutes only around three percent of overall origination volume. Source: Figure 5, Figure 6 (Experian Ascend Insights Dashboard). The shift to a purchase-driven housing market What does this all mean? Our view is that pockets of refinance volume (rate and term, VA, FHA, cashout) are available to those lenders with a sophisticated targeting strategy. However, the data also very clearly indicates that this market is still very much a purchase market in terms of opportunity for originations growth. This position should not surprise long-time mortgage lenders, given that purchase volume has always constituted a significant majority of origination volume. However, this market is a different purchase market than lenders may be used to. This purchase market is different because of unprecedented statistics about the housing market itself. The average age of a first-time homebuyer recently reached a record high of 38. The average age of overall homebuyers in November of this year similarly jumped to a new record high of 56, with homes being “wildly unaffordable for young people.” Twenty-six percent of home purchases are all-cash, another record high, and homeowners have an aggregate net equity position of $17.6 trillion, fueling those all-cash purchases. The market is expensive both from an interest rate perspective and a housing price-level perspective, and those trends are driving who is buying homes and how they are buying them.2 Opportunities for lenders in 2025 What do these housing market dynamics mean for lenders? To begin with, lenders should not spend money marketing mortgages to consumers in their 50s and 60s with large equity positions. These consumers are likely to be in the 26 percent all-cash buyer cohort, and that money will be wasted since mortgages are no longer so cheap that even cash-rich buyers would take them. Further, this equity-rich generation has children, and nearly 40% of those children borrow from the bank of mom and dad to purchase their first home. Since roughly a quarter (albeit a shrinking quarter) of homebuyers are first-time homebuyers, and since 40% of those rely on help from parents to facilitate that purchase, it may make sense for lenders to identify those consumers with 1) children and 2) significant equity positions and to offer products like cash-out refinances or home equity loans/lines to help facilitate those first-time purchases. Data is critical to executing these kinds of novel marketing strategies. It is one thing to develop these marketing and growth strategies in principle and another entirely to efficiently find the consumers that meet the criteria and give them a compelling offer. Consider home equity originations. As Figure 7 illustrates, HELOC originations are strong but have completely stalled from a growth rate perspective. As Figure 8 illustrates, this is despite the market's continued growth in direct mail marketing investment. Although HELOC origination volumes are a fraction of mortgage—around $27b per month for HELOC versus $182b per month for mortgage—there are significantly more home equity direct mail offers being sent per month (39 million) for home equity products as there are for mortgage (31 million) as of October ’24.3 This all means that although many lenders have wised up to the home equity opportunity to the point of saturating the market with offers, few have successfully leveraged targeting data and analytics to craft sufficiently compelling offers to those consumers to convert those marketing leads into booked loans. Source: Figure 7 (Experian Ascend Insights Dashboard), Figure 8 (Mintel). Adapting to a resilient housing market In summary, the housing market, comprised of mortgage and home equity products, has experienced persistent growth over the past year. Many who are reading this note will have benefitted from that growth. However, as we have identified, in many respects housing market growth has 1) been concentrated to some key borrower demographics and 2) many lenders are investing in marketing campaigns that are not efficiently reaching or convincing that key housing demographic to book loans, whether it be a home equity or mortgage product. As such, as we move into 2025, Experian advises our clients to focus on the following three themes to ensure they benefit from this trend of growth into the new year: Ensure you effectively differentiate your marketing targeting, collateral, and offers for the various demographics in the market. Ensure your origination experiences for mortgage and home equity products are modern and efficient. Lenders who force all borrowers through a painful, manual legacy process will waste marketing dollars and experience pipeline fallout. Although the market is growing, other lenders are coming for your current customers. They could be coming for purchase activity, refinance opportunities, or they may be using home equity products to encroach on your existing mortgage relationship. As such, capitalizing on growth in 2025 is not merely about gaining new customers; it is also about retaining your existing book of business using high-quality data and analytics. Learn more 1 Although December numbers are available for year-over-year comparison, we excluded them due to the holiday period's strong seasonality patterns. 2 The Case-Shiller index recently topped out at record levels. 3 Mintel/Comperemedia data.
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
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