The mortgage finance industry is in a state of flux. One constant is the government-sponsored enterprises of Fannie Mae and Freddie Mac currently finance the vast majority of the nation's home purchases.
However, the GSEs will be shrinking in the future. And a panel at the Mortgage Bankers Association national secondary market conference and expo in New York strategized ways to deliver homeownership to the next wave of clients, in the absence of a centralized secondary mortgage market.
The future of mortgage lending belongs to the Echo Boomers, or the children of baby boomers, mortgage industry executives said Monday.
While this demographic cohort is roughly 80 million strong, many are staying on the sidelines for now, according to Lisa Zakrajsek, executive vice president of Wells Fargo (WFC: 29.331 +0.69%). For the most part, this population is more interested in renting. However, a notable portion will want to buy a home, one day.
"We did a deeper study of this demographic," she said. "This millenial population in the age range of 11 to 31 is an enormous population. There are 6 million more potential first-time homebuyers today than there were in 1977 and this population is still interested in buying property."
Despite the desire to buy a home, Zakrajsek said these people, also known as Millennials, are putting off acquiring a mortgage as the market continues to drag and the jobs situation remains shaky. But she believes the next generation of homebuyers will dive in head-first when the time is right.
Shawn Krause, executive vice president of Quicken Loans said these young buyers are expecting a lending industry that is more in line with their preferences. This means products need to be diverse and evolved, employing traditional methods, as well as online lending services and even social media outreach, according to Krause.