Overcoming student loan debt is the key to winning over the Millennial generation
Financial institutions, primarily banks, have gone through brash changes in the wake of the millennial generation entering the work place. This new wave of consumers require new marketing techniques, digital info structure and a more robust overall strategy to win their loyalty. When it comes to mortgages, is the key to the millennial heart going to be super-cool apps they can use on their smart phones or maybe a catchy/viral marketing campaign? These might not cut it.
According to a 2017 survey from the National Association of Realtors (NAR), 80 percent of millennials don’t own a home. “Of those who don’t own a home, 83 percent of those say that student loan debt is holding them back from purchasing a home,” says Jessica Lautz, managing director of survey research and communications for NAR and a co-author of the study. This shouldn’t surprise us as we know student loan debt worsens your debt-to-income ratio, a crucial part of getting approved for a mortgage.
This survey should be one of the most eye opening statistics in the mortgage industry. There are approximately 150 million millennial's alive, 120 million of them don’t own a home and 100 million of that batch can’t get one because of student loan debt (or at least just think they can’t). This is a huge untapped market, where in a purchase heavy market, could be extremely lucrative for mortgage lenders and brokers. I’ve seen a very weak effort from lenders and brokers to figure out how to market mortgages to this demographic. There are government/private products out there designed to help a student loan riddled individual get a loan but these are almost all unknown to millennial's. Fannie Mae has even explicitly changed their guidelines to be more lenient towards individuals with student loan debt.
What everyone sees is student loan debt interfering with millennial's entering the mortgage industry, what I see is the key focus to winning over this extremely important group.
Photo by Caleb Minear on Unsplash
The opinions expressed in this post are the sole view of the writer and do not reflect the opinion of Princeton Mortgage Corporation.