To Boost Millennial and Minority Lending, Start with Hiring
Shifting demographics are leading to a rise in the number of millennials and minorities in the U.S. population, creating an exceptional opportunity for mortgage lenders to serve these communities as they look to buy homes.
Nonetheless, post-crisis homeownership rates among millennials and people of color remain depressed. The homeownership rate during the second quarter of 2016 was 45.1% for Hispanics, well below the 2007 peak of 50.1%, according to data from the U.S. Census Bureau. Additionally, only 34.1% of people under age 35 owned a home in the second quarter, down from the peak of 43.6% recorded in 2004, the Census Bureau said.
And one contributing factor is the lack of hiring and marketing focused on millennials and minorities.
"They're leaving money on the table by not making it more of a priority to bring in more minorities and millennials," said Kristin Messerli, founder and managing director of Cultural Outreach Solutions, which specializes in helping mortgage companies reach and serve multicultural and millennial consumers.
The average age of a mortgage loan officer is 47, Stratmor Group reported in its 2015 Originator Census, a study of 14,000 mortgage professionals. About 10% of loan officers are over the age of 60, while only 3.3% are younger than 30, the report found.
Stratmor also found that only 10% of loan officers who reported their ethnicity were Hispanic or Latino, and only 3% identified as black or African-American, while 81% self-identified as white.
This dissuades them from investigating mortgage careers, despite the relatively low barriers to entry. To bridge this gap, the solution is quite simple, according to Patty Arvielo, New American Funding president and co-founder.
"Everybody wants to make it complex," Arvielo said. "If you don't have the talent in your organization, you need to change that. You just have to look, but they are out there."
And that doesn't just mean hiring loan officers and sales support staff, but also upper-level management that is young and diverse. As Arvielo said, she does "not sit in a white ivory tower," but works at the street level with sales, which makes employees "feel like a part of my family."
Hiring can also be half the battle when it comes to marketing to these demographics. For instance, Arvielo said that Latinos find common ground in religion and being family-oriented, so lenders must have "cultural significance" and reflect these values to attract Latino borrowers.
Marketing also does not need to pander to be effective. As Arvielo reiterates, a majority of Hispanics speak English proficiently.
"You don't have to run to Univision or Telemundo," she said, adding that it's better to allow loan officers to choose how best to engage with prospective clients.