Minority homebuying cohorts are continuing to gain traction in the mortgage market – and one association president is urging mortgage professionals to sit up and take note
The US housing and mortgage markets have seen purchase activity dip over the last two years, with high home prices, lack of supply and rising mortgage rates all weighing down on homebuyer prospects.
But there’s still opportunity out there if lenders and originators know where to look – and the president of a leading association advocating for inclusivity, diversity and equity in the mortgage industry is urging mortgage professionals to tap into flourishing multicultural markets to maximize their businesses’ growth potential.
Four cohorts of multicultural homebuyers are especially prevalent in the present market, according to Tony Thompson (pictured top) of the National Association of Minority Mortgage Bankers of America (NAMMBA): single females, millennials, communities of color, and LGBTQ buyers.
“Those four combined will be, and are today, the fastest growing segments of homeowners in the country,” he said. “2024, for most originators and lenders, has been a challenging year to put it very nicely. What we see, though, in the midst of the challenges are opportunities for lenders to reposition their business to serve high-growth, high-potential markets, which we classify and really talk about as the multicultural market.”
In its Homebuyer Report for 2024, which featured insights from Freddie Mac, the National Association of Mortgage Brokers (NAMB) highlighted some progress in closing the gap in homeownership rates between minorities and Non-Hispanic White Americans in recent years.
Still, homeownership disparities are significant for low-income Black and Latino households – and there remains considerable space for improvement, according to Thompson.
“Right now, if you look at most data in every major market, it would say that there’s a tremendous amount of room for improvement as it relates to homeownership for communities of color,” he said. “If I’m a mortgage broker or I’m a mortgage originator, that’s music to my ears.
“What that’s saying is there are several markets where you have an opportunity to serve more clients who are looking or interested in owning a home. They just need a blueprint and a road map.”
How do mortgage professionals reach minority communities?
Identifying and marketing to individuals within minority communities may be easier said than done for lenders and brokers with no experience in reaching or servicing those buyer cohorts.
Thompson said that should begin with pivoting from a generic sales-focused approach to one centered around storytelling. “What we mean by that is, if you think about the last three to four years, lenders have focused on selling rate, selling product, selling closing costs, selling closing time,” he said.
Alex Elezaj, EVP at United Wholesale Mortgage, expects a strong 2025 mortgage market, with rates likely to drop soon. https://t.co/5BBQsiliVb
— Mortgage Professional America Magazine (@MPAMagazineUS) November 19, 2024
“Today’s consumer is different in terms of wanting to be educated, wanting to be provided information and content that can help them understand the benefits of homeownership. Lenders have to truly understand their customer of tomorrow [includes] young females, millennials, communities of color and LGBTQ+ individuals, and this cohort really focuses on education and content in terms of learning about the mortgage and real estate process before they engage in homeownership.”
For brokers, that means getting on social platforms and producing content that addresses specific cohorts’ goals and aspirations – and working to develop the skillset and cultural competency to do so in an effective and measured way.
Thompson said NAMMBA’s goal is to help connect lenders and brokers to the minority marketplace, developing tailored material – social selling tools and wealth creation content – that they can use in their marketing outreach. He also noted a “disparity” of multicultural broker shops, another shortcoming the association is aiming to address through a 12-month emerging leadership program to help brokers build their business and sales team.
Why leaving existing assumptions at the door is essential
It’s important for lenders to park preconceived notions they may have around particular borrower types – especially millennials, according to Thompson. The assumption might prevail that every millennial has student loan debt, “and that’s really not the case,” he said.
“There are hundreds of thousands of millennials who are in a position to buy a home, have the credit, have the capacity, and also have the cash. The challenge is that most brokers and most lenders don’t know where these buyers are.”
That’s where a talented mortgage professional comes in. “If you look around, the data still says that there are plenty of qualified minorities and millennials who are eligible to buy a home,” he said. “They just don’t know how and don’t know the process.”
With a “seismic shift” currently taking place among minority buyer demographics, Thompson urged brokers and lenders to gear up their business to tap into that trend – with social platforms becoming the number one entry point.
“Whether you’re a broker or mortgage banker, you’re going to need to really increase your outreach and your engagement activities on social platforms like Instagram, like YouTube, like Facebook,” he said, “to be able to really communicate and engage and help this buyer cohort.”
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