In light of recent research that suggests Millennials are just as keen as their parents to buy a house, brokers are encouraged to actively engage with younger borrowers.
A survey conducted on 2,127 Millennials (aged 23-38) on behalf of customer-owned lender Gateway Bank has found that 94 per cent of Millennials still see owning their own home as an important goal.
Further, the research found that 66 per cent of Australian Millennials who are not already on the property ladder are intending to purchase a property within the next five years.
In light of these results, Zeb Drummone, Gateway Bank’s head of customer operations, encouraged brokers to engage with the younger generation of borrowers.
“Millennials represent a growth opportunity for the mortgage industry,” Mr Drummone told The Adviser.
“Millennials, like their parents, have aspirations of the great Australian dream, owning their own home. We need to help them.”
The survey also found that 58 per cent of respondents believe that saving for a deposit is the biggest barrier for Millennials trying to get into the property market, which provides brokers with an opportunity for engagement and education with this younger demographic of client, according to Mr Drummone.
“Educating these customers as to what deposit is required is the first step,” he stated.
“A deposit may not be necessary, LMI [lender’s mortgage insurance], a family-pledge guarantee or the recently introduced First Home Loan Deposit Scheme could help these customers enter the market sooner than they ever anticipated.”
According to the research, two-fifths of respondents stated that a low interest rate was the most important factor in selecting the right mortgage product.
Further, more than a third of Millennials (36 per cent) rely on their family for advice on home loans, while 29 per cent will rely solely on their own independent online research.
Mr Drummone told The Adviser that the research suggests younger borrowers might not understand that the product providing the lowest interest rate isn’t necessarily the most ideal product for their financial situation and goals.
This fact also provides an opportunity for brokers to step in and educate clients who might not otherwise be receiving accurate advice from family members, he said.
“For some customers, a rate discussion is appropriate; however, brokers and lenders need to educate our customers, so they better understand product features and benefits, aftercare service and even ethical business practices,” the Gateway Bank head of customer operations commented.
“Customers don’t know what they don’t know. If they are never educated on different business practices, by example, they may not realise they are directly supporting other less ethical investments.
“They can then factor this into their buying decisions.”
The Gateway Bank research echoes similar findings from RFi group, which recently suggested that Millennials are three times more likely than other adults to turn to a fintech or neobank for their everyday banking solutions.
Mr Drummone also highlighted that while Millennials are more likely to turn to technology than their older counterparts before they turn to their local broker or banker, they still rely on human interaction when they face challenges.
“Interestingly, when we mapped our customer journey, we found that Millennials still want a human interaction at specific points in the journey.
“Particularly at points of high tension and high information volumes, specifically product and lender selection, approval and settlement,” he said.
In conclusion, Mr Drummone noted that the services that brokers are called to provide to younger borrowers is just the same as any other client.
“[R]eally, customers don’t want a mortgage. They want what the home provides them and the financial security it can provide.”
Are you interested in the issues shaping the roles of mortgage and finance brokers? Don’t miss your chance to hear about all the big ideas for the year ahead, and gain the tools you need to position your business for growth and prosperity. Book your ticket to the Better Business Summit today.
[Related: Young Aussies still aspire for home ownership]
Hannah Dowling is a journalist for The Adviser and Mortgage Business.
Prior to joining Momentum Media, Hannah worked as a content producer for a podcast catering to property investors. She also spent six years working in the real estate sector at a local agency.