New study results - What lenders need to do to boost business with minority borrowers
As a native Oregonian, I have definitely seen big changes in the demograhics of people who live here and who ultimately end up buying homes here. I know… I’m not living in S. California where the demographic changes have been much more prevalent… but Oregon has seen its share of demographic changes in recent years.
Coming from the lending industry a little ways back (last year:)… I saw first hand the growth of home buying by minorities. In my neck of the woods, hispanics are an ever growing population and they have been buying homes at record paces.
So… why haven’t most mortgage brokers seen these changes and adapted to the market to capture more business from these minority buyers? Well… some have… and some haven’t.
In the Portland area, there are a few good mortgage lenders who cater specifically to the hispanic community. They have hispanic speaking brokers, literature with Spanish writing, and often work with hispanic realtors.
However, most of the rest of the mortgage industry (in my area anyhow) is still going about their work the same way as years past. They haven’t customized their service to meet the needs of the minority buyers.
A recent study came out by Campbell Surveys that highlights what lenders need to do to boost business with minority borrowers.
A novel idea huh? Ask the target market what they want… and give it to them.
This study shows that just a few key added benefits will capture more minority borrowers and boost the business of mortgage brokers who institute these changes. In the study, it reveals that only 48% of minority buyers end up going with their realtors mortgage broker. This isn’t because the broker is incompetent (most of the time), rather that the borrower isn’t comfortable with the broker and what they have to offer them.
These changes aren’t anything surprising. In fact, if the mortgage brokers would sit back for a second and put themselves in the shoes of the average minority borrower these changes would be obvious. The top two things that will boost business from minority borrowers are:
Offering foreign language services. Weird huh? Borrowers want to be able to speak to someone in the language they are comfortable speaking. This goes down to the core of customer service and should be one of the immediate changes that mortgage brokers make.Offering alternative loan products. This one is less obvious to many mortgage brokers. Many minorities desire loan products that allow for lower, or no, downpayment. One of the big loan products that lenders should market to minority borrowers is loan products that allow for downpayments coming from the borrowers family. Minorities, including hispanics, have tightly knitted families and often act as a family unit. However, most conventional financing requires that the downpayment come from the borrowers assets only. Allowing for acceptance of outside funds for the down payment is a huge benefit that many minorities are looking for.
So… if you are a lender and are not tapping into the ever growing minority market, you are missing out on a ton of business. If you aren’t yet offering language services such as translators or a broker who speaks the language… you are alienating many borrowers and costing yourself revenues.
Also, spice up that marketing a bit. Offer customized loan packages that meet the needs of minorities and truly help them get into a home more easily.
In the end, all consumers will go where they feel comfortable and where their needs are met. If you aren’t doing both of these… you are $hit out of luck.
On the realtors side. You can serve your minority buyers better by partnering with a lender who caters to the minority borrower. Instead of sending your minority buyer to your favorite lender who doesn’t cater to their needs… team up with a lender who does and give your buyer the option between the two. By doing this, you are serving your client better and it will reflect well on you.
Bottom line… adapt to the changing market and offer what your target market wants. Don’t just sit idly by and wonder why your minority borrowers keep jumping ship and going to your competition.
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