• Josh Teti

Changing Borrower Demographics: Part 1 - Expanding lender reach through data mining; can millennials


In this day and age, data is everything. Accessing specific data allows companies to create strategic marketing plans and target customer groups that are flying under the radar. Mortgage loans are a commoditized product, so lenders are constantly looking for ways to create competitive advantages to increase their market share. With the expansion of HMDA data collection starting January 1, 2018 , certain lenders are seeing this as an opportunity rather than a burden. According to this article, lenders are using data mining tools to examine demographic data of loans in their portfolios and identify pockets of borrowers where increased market share may exist. In turn, they create marketing and business strategies to expand their footprint to those groups. Now I’m sure you’re thinking to yourself…. wait a second, isn’t it illegal to target or ignore certain demographic groups when offering home loans (also called redlining and reverse redlining)? And the answer is 100% yes – but that’s not what’s happening here. Lenders are using the data to make changes in their products/services to accommodate customers and the overall household migration, rather than relying on customers to fit into their existing products/services. The overall perception of HMDA and its purpose is that it’s a compliance tool used to keep lenders in check. However, lenders are flipping the script and using it as a marketing tool to gain insight and better understand their market opportunity for growth.

My thoughts: these creative strategies are absolutely necessary if lenders not only want to differentiate themselves, but also keep up with the ever-changing mortgage market. Check out these facts that are based on US Census data: minorities will make up half of the US population by 2044. African-American wages in higher income brackets are growing faster than any other group. Single home buyers make up 1/4 of the mortgage market and of that group, single women represent a 17% share versus only 7% for single men. It is evident that a shift is happening, and lenders need to decide if they want to come along for the ride or stick with the status quo. What are your thoughts?

The holiday season is here and it’s time to start thinking about Christmas shopping. Most people were crazy enough to participate in Black Friday and get started early; however, if you’re like me, I like to wait until the pressure is really on to even think about what type of candle I’m going to get Aunt Barb. However, according to this article, a new study by Credit Suisse shows that millennials in several advanced economies across the world are likely going to face the worst income inequality of any generation. That brings up the question – will millennials be able to afford to buy Uncle Rick that Pittsburgh Steeler sweatshirt this holiday season?! Nevertheless, this season is about giving, and I have no pro

blem packing my lunch and only having a few beers over the weekend in order to save some extra cash to buy my sister that Jake Gyllenhaal poster she NEEDS to have.

#BorrowerDemographics #Millennials #Holidays #USCensus

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