are millennials mortgage-ready?
TRANSCRIPT
©2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
Are Millennials Mortgage-Ready?
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Introducing: Cindy Waldron
Freddie Mac
Renae ShermanExperian
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Millennial population growth
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Millennials
Mill
enni
alsSurpassed the Baby Boomer generation in 2015
75M individuals strong
75% say homeownership is a long-term goal
60% have plans to buy a home in the future
©2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
Research data overview
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Research data overview Obtained 10% sample of Experian File OneSM
consumer credit database VantageScore® 3.0 credit score Premier AttributesSM v1.2 Income InsightSM and Debt-to-Income InsightSM
Matched to Experian ConsumerViewSM marketing database Age Education Individual and household-level demographics
Data summary
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Data summary
Mortgage readiness – underwriting criteria:
Strong
VantageScore® 3.0 greater than 737
Total DTI < 45%
Moderate
VantageScore® 3.0 between 661 and 736
Total DTI < 45%
Weak
VantageScore® 3.0 less than 661 AND / OR
Total DTI > 45% Foreclosure in the past
84 months Bankruptcy in the past
12 months Severe delinquency
(120-180 DPD) in the past 12 months
No foreclosures in the past 84 months No bankruptcies in the past 12 months No severe delinquencies (120-180 DPD)
in the past 12 months
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Data summary
8
Total sample11,598,718 678
AVERAGE
Millennial30.4%
Non-Millennial69.6%
Mortgagereadiness
18.3% Strong
13.9% Moderate
30.8% Weak
30.8%Have mortgagetrade on file
3% Unscoreable
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Generational review
Gen XAges 35-51
Baby Boomers
Ages 52-70Silent
Ages 71+MillennialsAges 18-34
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600
650
700
750
800
850
10
MillennialsAges 18-34
Gen XAges 35-51
Baby Boomers
Ages 52-70Silent
Ages 71+
Average VantageScore 3.0 credit scoreBy generation
713740
636665
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Millennial characteristics
Millennials
AGE 26.3 years
$50,908
636
14%
$4,002
64%
AVERAGE INCOME
AVERAGE
AVERAGE
PERCENT WITH A MORTGAGE
AVERAGE REVOLVING CARD BALANCE
STUDENT LOAN DEBT AS A PERCENTAGE OF TOTAL DEBT
(for those with student debt)
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How many Millennials are Mortgage Ready?
Millennials
Strong 14%Moderate 19%Weak 50%Have a mortgage 14%
Unscorable 3%
24,508,934Strong + Moderate
Mortgage Ready Millennials
19%
23%22%
26%
Age Distribution of Weak Segment:
18-2122-2526-2930-34
29.1%
70.5%
Near-Moderate in Weak Segment:
601-660< 601
VantageScore® 3.0 range:
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Do income and education level indicate Mortgage Readiness for Millennials?
Education level Average Income Insight
Weak Moderate Strong Have a Mortgage
0%
20%
40%
60%
80%
100%
Less than High SchoolHigh SchoolSome College (incl trade school or current student)Undergrad DegreeGraduate Degree
Weak Moderate Strong Have a Mortgage
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$35,435
$49,164
$73,823
$87,188
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Millennial student loan impact
Monthly student loan payment and % of gross monthly income
Student loan balances by segment
67%33%
No Student Loans1+ Student Loans
Weak Moderate Strong Have a Mortgage
0%
25%
50%
75%
100%
$1k-$5k $5k-$10k $10k-$20k $20k-$40k $50k+
Weak Moderate Strong Have a Mortgage
$0
$50
$100
$150
$200
$250
$300
$350
$202 $240
$304 $279
Overall bala...0%
25%
50%
75%
100%
Student loan debt burden
6.8%5.9%
4.9%3.8%
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Where do Millennials live?
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Where do Mortgage Ready Millennials live?
- Freddie Mac Borrower Help Center
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Do Mortgage Ready Millennials live in affordable areas?
- Freddie Mac Borrower Help Center
©2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
Opportunities
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- Freddie Mac Borrower Help Center
Where should lenders focus to serve potential Millennial home buyers?
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What factors predict Millennials home purchase likelihood?
Logistic Regression
Analysis Gender Number of
children Education Housing stock Local economic
factors
VantageScore® 3.0 Age Student debt Credit card debt Auto loans Income Marital status Housing prices
Significantfactors
Insignificantfactors
Millennialdataset
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How do the significant factors impact Millennial home purchase likelihood?
Increase likelihoodof home purchase:
Millennials 10% increase in income = 35% more likely to purchase
10% increase in student debt = 4% less likely to purchase
10% increase in home price = 2% less likely to purchase
Married = 2.67 timesmore likely to purchase
Decrease likelihoodof home purchase:
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Closing
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Conclusion
There are a lot of sourcing opportunities for Millennials!
Lack of affordable housing
High cost areas
Credit constraint borrowers
Top areas of focus for Mortgage Ready borrowers
Greater New YorkGreater Houston Greater Miami
Greater ChicagoGreater San Antonio Greater Dallas Greater San Bernardino
Greater San Francisco
Greater San AntonioGreater San Bernardino
Homeownership challenge areas
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Consumer resourcesWhere to get help
Freddie Mac Borrower Help Centers
FMAC information on borrower help centers
Future expansion plans based on this data?
www.freddiemac.com/singlefamily/housingpros/help_centers.html
ExperianCredit EducatorSM
30-minute phone-based education session conducted by a trained Experian Credit Educator agent
Review of individual credit score and credit report basics
www.experian.com/credit-education/services.html
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©2016 Experian Information Solutions, Inc. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein are the trademarks of their respective owners. No part of this copyrighted work may be reproduced, modified, or distributed in any form or manner without the prior written permission of Experian. Experian Public.
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