How to Stay Competitive With a New, Younger Generation of Homebuyers

It’s no secret the mortgage industry has seen more than its fair share of ups and downs over the past two years. Now, as lenders navigate an increasingly uncertain market amid rising interest rates and a potential recession looming, they’re also tasked with preparing for a new wave of younger homebuyers and changing consumer demands. As millennials and Gen Z enter the market – accustomed to near-instant e-commerce transactions in an increasingly digital world, having grown up with smartphones, computers, tablets and constant access to technology right at their fingertips – they’re bringing with them a new set of expectations about the lending experience.

A recent report from National Mortgage News showed that while 64% of baby boomers say they are satisfied with the amount of time their home buying transactions took to close, that percentage falls to less than half among millennials and Gen Z at 48% and 36%, respectively. Meanwhile, across all generations, more than half of those surveyed applied for a mortgage online. As consumers continue to embrace a more digital lending experience, it’s becoming increasingly important that lenders do the same. Here’s how:

1. Leverage automation to help enable faster, more confident decisions.

As more and more consumers opt to complete their mortgage applications online, lenders increasingly need the ability to provide responses as quickly as possible. Gone are the days of relying on consumer-provided information, such as W-2s and bank statements, to verify ability to pay, and those lenders that have yet to adopt technology must do so now or risk falling behind. Implementing digital verifications of income and employment can be key to helping lenders achieve a faster, more consistent and better-informed loan decisioning process, leveraging automation to help provide answers to consumers near-instantly.

Using a third-party data provider to verify income and employment can help ensure lenders have the most current data, enabling them to approve and qualify a homebuyer faster and with greater confidence. Leveraging automated verifications of income and employment during the application process and beyond can not only reduce paper-based processes that add friction to the lending experience, but also help improve security by providing a direct connection to data provided directly by employers and payroll providers, with a secure SSN-only search.

Adopting an automated solution to verify income and employment can also help lenders ensure compliance with industry requirements since most mortgage lending processes require that lenders reverify a borrower’s assets post-closing. While requirements vary, in some cases, lenders will need to reverify income and employment within 10 business days. By leveraging digital verifications of income and employment throughout the entire closing cycle, lenders can help speed up the process from beginning to end.

2. Integrate technology to help further reduce friction within the entire lending process.

While verifying income and employment has long been a common practice for mortgage lenders, it’s how they perform those verifications that can really set them apart from the competition. Automation has revolutionized how successful lenders conduct business, especially when it comes to leveraging the right data efficiently for lending decisions. Rather than relying on consumer-permissioned accounts that add more work for the applicant, automated verifications of income and employment help take the work off the consumer, making the process even more seamless.

In addition, consumers and lenders should consider where and how borrower data is accessed, transferred and stored when borrowers provide their private banking or payroll credentials in order to complete a verification. In some cases, verifiers may have access to consumer-permissioned data beyond the loan decisioning period, adding additional risks that could compromise security.

Lenders can further realize efficiencies by leveraging a verification of income and employment solution integrated directly within their point-of-sale (POS) solution. With the right technology, they can adopt an enterprise-wide, standardized loan decisioning framework based on integrated income and employment data from a single source. When current income and employment data is integrated and pre-populated, that data drives downstream decisions in the POS, such as automated underwriting and the loan origination system, helping further reduce friction throughout the entire loan cycle.

The minute a consumer hits submit on their online application, the timer starts. And for those consumers increasingly accustomed to fast-paced online interactions and transactions, when they don’t get a quick response – or receive a follow-up for more information – they may take their business elsewhere. Working with a third-party expert to integrate automated income and employment data throughout their entire lending process can give lenders a competitive edge by helping to ensure they’re meeting the technology-driven, fast and efficient decisioning processes consumers increasingly demand.

Ashley Wood is Vice President, Mortgage Verification Services at Equifax.