The refinancing boom of late has left its mark. With so many homeowners locked into mid-3% mortgage rates, the odds are they will stay put for awhile.
So what's a credit union to do? How does it keep members' interest and continue growing in its purchase-mortgage business? Turn your attention toward the next-gen home buyer.
Millennials in search of their first home can provide a great opportunity for credit union lenders. According to the National Association of REALTORS® Profile of Home Buyers and Sellers 2013, first-time buyers:
- Make up about 40% of the home-buying market.
- Nearly 60% are ages 25 to 34 — a targeted demographic for any institution.
- 76% are renters, making them ready-to-move buyers with no existing home to sell.
- 60% are looking to buy because they desire homeownership.
And a 2014 study by BMO Harris Bank revealed a large majority of 18-34 year olds — 74% — plan to purchase a home within the next five years, with 32% reporting plans to buy in the next 12 months and 45% within the next two years. Factored together, these are good signs for CU mortgage providers.
Assistance is Needed
Roughly 1 million new households are established every year in this country — and many of those include first-time home buyers. Not only do these consumers make up a large population, many need guidance and expertise to help maneuver the home-buying process. Among common mistakes made by next-gen buyers: not knowing how much house they can afford, miscalculating home ownership costs, not understanding the process of making an offer, and not budgeting for taxes and maintenance. These missteps can have serious consequences, and credit unions are well-positioned to offer the information and resources to help avoid these errors.
Relationships Are Built
Credit unions are wise to develop a proactive plan to court first-time buyers and build long-lasting member relationships. Here are some tips:
Make member awareness a marketing priority: budget for promoting the mortgage services available at your credit union. Use a variety of channels — online, e-mail or text, print, in-branch, mailed communications — to ensure your marketing messages reach a variety of members and potential members. The more often they see your name connected with real estate and mortgage programs, the more likely they will think of you or refer others when it's time to buy a home. You want to be the first one they contact.
Think beyond the mortgage: For first-time buyers, it's about more than just a home loan. Step in their shoes and think about the resources they might need: online search tools, agent referrals, information on local neighborhoods, links to home-buying articles, educational seminars. Consider expanding your credit union's mortgage program to offer these resources through a full-service real estate program.
Monitor member interest and follow up: the average search for a home takes 18 months, from considering the purchase to signing documents at closing. It's important to follow a potential buyer's progress, keeping the lines of communication open and your credit union top of mind throughout the process.
Don't underestimate the importance of providing service to and being responsive with this group of buyers.
Current market conditions make this an opportune time for credit unions to pursue next-gen home buyers who are looking for value and seeking financial guidance in making their first real estate purchase. By thinking beyond the mortgage loan and going the extra step for first-time buyers, credit unions can build relationships to last a lifetime.
Mike Corn is CEO for CU Realty Services, a mortgage CUSO. For more information, visit
