Much talk lately has been about when the Millennial generation, those 19 to 35, might jump into the housing market.
Optimism grew when interest rates declined, Fannie and Freddie brought back their 97% financing and FHA cut their annual premium for a 30 year loan by 50 basis points. Still, we weren’t quite sure if all this would move the Millennials into the market. Especially with the student loan debt they carry.
It seems, with the economy recovering and more people renting due to past problems or barriers to entry into the buying market, rents are beginning to rise. Rise to such levels that these Millennials are seriously thinking about buying a home (Millennials).
With the low down payments required now for both conventional loans and those insured by FHA and the reduced premium resulting in a lower qualifying debt to income ratio in the case of an FHA loan, the monthly cost of owning a home in many cases is less than the cost to rent. As an added bonus, the home buyer gets to build equity in their new home with some tax write offs (at least for now). The tide is shifting.
This all bodes well for this generation to stake their claim to the American Dream. Lenders need to be prepared with not just the financing needed to assist them in realizing this dream, but also with the quality and service they expect.
This generation, as I have said in the past, is a new breed. They won’t stand for the old drawn out manual process of getting a loan. They want online access to information, rates, applications and documents, with the ability to communicate electronically with their lender at any time.
With the likelihood of the Millennial generation starting to buy homes in 2015 becoming more and more a reality, it’s time to get ready to service their needs. Things may be finally looking up for mortgage lenders. Be ready