Miriam Moore is the President of Default Services at ServiceLink, a provider of transaction services to the mortgage and finance industries.
Despite the headwinds plaguing the real estate market, many buyers remain hopeful. The question for lenders is whether they’re aligned with what these borrowers actually want.
A recent study from my company found that more than half (52%) of Gen Z respondents (born between 1997 and 2012) say conditions are favorable for buying and 67% of this same group say they plan to buy in 2025.
Considering originators are always forecasting, tracking trends and other movements in the industry, it’s important to get a pulse on buyer’s desires, plans and expectations. Understanding these insights can better prepare industry decision-makers for any shifts in sentiment that could impact demand, volume or borrower satisfaction.
In light of that, here are three not-so-obvious trends we’re currently tracking and how lenders can proactively respond:
1. Give Borrowers More Control Over The Mortgage Process
Many aspects have evolved in the process over the years, including buyers’ desire to take a more active role in the transaction. In fact, the same study indicates that, rather than just be told where to sign, borrowers want to participate in the process and have more control than they have in the past. When asked what type of mortgage technology would sway them to work with one lender over another, their answer was quite the wake-up call for many in the industry.
Over three-quarters of all respondents indicated they’d be most likely to go with a lender that offers digital tools for scheduling important milestones like appraisal and closing appointments. Traditionally, this manual process involved multiple phone calls and hinged mostly on the availability of the appraiser or agent. In other words, much of it was outside the buyer’s control, and it also added days to the timeline.
New technology allows borrowers to use their phone or tablet to access the real-time calendars of appraisers and closing agents. This type of platform (which, in full transparency, is something offered by my company) can help buyers feel a little more in the driver’s seat instead of just being along for the ride.
Not only does digital appointment scheduling give buyers more of a part to play in the process, but it also provides the level of convenience that they’re used to in daily digital transactions.
2. Earn Buyer Trust By Making The Process Clearer
About 49% of Gen Z respondents in the survey said they felt fully prepared for real estate transactions, which means the other half wasn’t so sure about what to expect. When asked what they would change about the financing process, respondents’ number one answer (for the second year in a row) was more transparency into the steps and fees. In other words, they don’t want any surprises while navigating the biggest purchase of their lives.
Transparency allows one to understand what’s happening at any given point in the transaction, being fully informed about key milestones and having advanced notice about potential snags and costs. To truly deliver on the transparency this generation craves, this is a great opportunity for lenders to make buyer education more of a priority.
Why is it so incumbent upon lenders to step up? Because our study found that they are not the main go-to when buyers are starting to look into real estate. In terms of where buyers turned to for advice, 63% of respondents said they went to their real estate agents, while only 30% said they asked their lender for advice. In fact, lenders finished fourth on the list behind friends/family, articles, blogs and social media.
Lenders and originators who want to stay relevant in 2025 will need to recalibrate their role in the market—not as sellers, but as strategic educators.
3. Help Buyers Navigate High Rates With Long-Term Strategies
Since the throes of Covid, we’ve seen mortgage rates climb to more undesirable levels. As of this writing, the average fixed rate on a 30-year loan is about 6.82%. Survey results indicate that tolerance for higher rates is waning for current real estate investors.
For Gen Z, respondents indicated they’re only willing to go up to a 5.8% rate from their current average of 5.1%. Millennials (born between 1981 and 1996), who have an average rate of 4.9%, say they would extend to a max of 5.5%.
Both of these rates are well below current market averages, but it’s not an absolute deal-breaker. Interestingly, Gen Z is most tolerant of higher rates, as 21% said they would be willing to take on a rate above 7%, and 10% said they would consider a rate above 8%. So how do you reconcile both Gen Z’s resistance to and willingness to take on higher rates? Perhaps their optimism extends to banking on more favorable market factors in the future.
Of those surveyed, 86% of Gen Z said they would consider refinancing in 2025 if conditions were favorable, compared to 64% of Gen X. This perhaps indicates they are willing to take on the temporary pain of higher monthly payments but have their eyes on the potential to decrease those payments through a future refinance opportunity.
Conclusion
To sum it up, buyers know what they want, and it’s important for those of us in the industry to understand these trends and demands to meet their needs. It’s imperative that the decision-makers be willing to shift priorities in order to take the mortgage industry and the consumer experience to the next level.
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