Opportunities and challenges with generational mortgage lending

Huge opportunities remain across the nation for mortgage lending.  We have moved beyond the dark days of 2009 and 2010 and emerged with optimism for further housing growth. While we might not want to pop the cork on a bottle of champagne just yet, there are many positive signs for housing in the future.

Credit unions continue to hold market share for first-mortgage originations near double digits. Although refinances have fallen, new loans continue to show signs of growth. Home values are climbing again, and interest rates remain low.

One point that became apparent at ACUMA’s workshops this year was the need for lending executives to join with their marketing counterparts and examine all of the needs, as well as the benefits and opportunities, for each of the four generations in the housing marketplace.

There are distinct difference with each generation, and I can see them within my own family.

• My spouse’s younger Millennial children have left the nest and started on their own housing plans. They are not quite ready for home buying but close enough to begin examining the possibilities.
• My Gen Y son, who has a primary residence and one investment property, is always looking for new opportunities.
• My own Baby-Boomer household remains comfortable in our home but looking to the future, downsizing becomes a possibility. I still enjoy our second-floor bedroom and office but I know from family experience that one day a single-story floor plan may be necessary.
• My older brother, well into his 80s and part of the Traditional generation, still lives at home with his spouse. He may not be in the housing market now, but a product akin to a reverse mortgage could provide a way to create monthly income or leverage assets to pass along financial wealth to his children and grandchildren.

In each generation there are opportunities, but one size does not fit all.  Certainly the practice of offering a menu of products on a “Daily Rate Sheet” now seems dated—almost a thing of the past. I often wonder if trying to address all of the generational differences in today’s housing market can even be done within the confines of a single organization. Does your credit union employ at least one person from every generation? If not, who do you rely on for vision and strategy?

A more general question: Is now the time for new loan products, those with features that speak to generational differences? It seems like a long time since a truly “new” loan product has been introduced. I can remember working as a loan originator almost three decades ago and discussing 15- and 30-year fixed rate loans, as well as adjustable rate loans. But I cannot think of really custom-designed products for the consumer—something I think the future (despite the increasingly stringent regulatory environment) will require.

Will homebuyers want to shop for a mortgage loan the same way they shop for a car? We know price is important. But so is familiarity. Like cars, homes come in all shapes and sizes—multiple bedrooms and baths; single and two stories, single family and condominium/townhomes. The designs differ but the loans are likely very similar.

Are we ready to explore customized options?

More importantly, does your strategy invoke duplicating the status quo of the marketplace or will you be a creator or inventor?

Apple founder Steve Jobs, one of our country’s most influential and creative geniuses, looked at the personal computer more than 30 years ago and translated it into many innovative and customized products from the Mac to the iPod and iPhone.

The challenge is to think like Jobs. Don’t limit your opportunities to what everyone else is doing; instead, look at how your institution can be extraordinary at meeting the needs of your members. The potential is limited only by the imagination and creativity you are willing to seek to reach your goals and prepare your organization for the future.