The
residential lending industry, and the companies inside of it, is always in a
state of flux. I am repeatedly hearing, "We're keeping a close eye on
personnel costs - if apps stay down here, we'll be evaluating our staffing."
We all know what that means - and I don't see applications zooming higher in
the near future. Who will make it through to Memorial Day unscathed? Yahoo
recently wrote about it. The
title of the article is a little misleading as not all the banks featured are
cutting, and there are reminders that the originators that hustle/leave their
desk will have more success than those that don't.
"I
want my children to have all the things I couldn't afford. Then I want to move
in with them." I would venture a guess that the majority of our comrades
in lending or real estate have children of varying ages. I recently saw a
cartoon of a high school boy talking to his counselor, saying, "I'd like
one of those careers where you make a six-figure income while wearing a T-shirt
and sweatpants." How are these youngsters coming along? Sallie Mae
tells us that the average American family borrows 27% of the total cost of
their child's college education, either through student loans or loans taken
out by Mom and Dad. Experian research finds that when comparing the
generations, it finds Gen Y (Millennials, 19-29 years old) has an average credit score of 628 vs.
653 for Gen X (30-46 years old), 700 for Baby Boomers (47-65 years old) and 735
for the Greatest Generation (66 years and older).
Banks and lenders have been
known to write off Gen Y for a host of reasons, including that they typically
have less money to invest and need fewer products and services. Simply put, Gen
Y isn't as profitable now as other customer segments, but that will change.
Baby Boomers are a good source of business for retirement planning and revenue
for banks and other lenders, but we should not find ourselves generationally
"locked down" and forget about Gen Y and Gen X. There are 90 million
Gen Y (Millennials) folks around, and lenders are salivating. For banks looking
to provide retirement advice, a new survey from TIAA-CREF finds 43% of
respondents between the ages of 18 and 34 don't feel informed about retirement
planning. By contrast, only 15% of those polled between the ages of 35 and 44
feel that way. It is true that those in Gen Y still have many years before
retirement, but it's all about tailoring your message to fit the audience. So
while many 20-somethings may turn a deaf ear when it comes to retirement
issues, you'll have a more willing audience if you discuss savings and
budgeting. And LOs find themselves taking the role of counselor rather than
mortgage order taker.
Studies find people in their
20s today aren't as likely be entrepreneurs as are their Baby Boomer counterparts,
but the percentage who run their own businesses typically goes up with age so
get involved early. Banks and lenders are trying to create strong
relationships over time: you want to be on the short list of companies
today's 20-somethings turn to down the road for business loans, small business
services, and home loans. To attract Millennials LOs agree that mobile access
is a given, especially for banking. Banks and lenders also must have online
tools and resources youngsters can use to help them figure out their finances.
Understand that Gen Y has grown up in the Internet world, so they are very
comfortable online and find enjoyment communicating digitally. This is an
on-demand and do it yourself (DIY) generation, so technology is important. The
key for community bankers, however, is also to understand that technology alone
isn't enough. There is no substitute for one-on-one attention, so don't forget
your roots because your bank is already well positioned at its core - just add
more tools.
Many
in the mortgage business think we are at a war of survival. Garth Graham
has a different take on this, as he recommends Preparing more for battle before you start fighting to maintain your market share.
With
no news, and a storm hitting, the MBS and fixed income markets didn't do a
whole heckuva lot Tuesday, except discuss how the refereeing during the
49er/Seahawks game was poor. Looking at our pal the 10-yr, its yield Friday was
2.83%, began Tuesday at 2.86%, and ended the day at 2.83% - just not much to
say! In the very early going we're at 2.85%, and agency MBS prices are off a
tick or two - but the issue today may be more "liquidity" - which traders came into work today during
the storm?
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