Rod Griffin: Education is the Key to Boosting Homeownership

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PERSON OF THE WEEK: Today’s first-time homebuyers face a lot of obstacles – in particular, higher mortgage rates, rising home prices, lack of inventory, and lack of affordability.

What’s more, today’s younger buyers may have certain pre-conceptions about how home financing works – based on what it “looked like” in the years of 3.5% loans. As a result, today’s younger homebuyers have an even greater need for detailed education on how the mortgage process works – and what, exactly, they are getting themselves into when they sign on the dotted line.

Fortunately, there are ways the mortgage industry can help prepare future generations to become responsible borrowers and homeowners. By providing consumers with educational resources to help them better understand the important aspects of home financing, lenders can help make homeownership a possibility for more people. To learn more about how this challenge is being addressed, MortgageOrb recently interviewed Rod Griffin, senior director of consumer education and advocacy at Experian.

Q: We understand Experian recently released a survey to determine how millennials and Gen Z are feeling about personal finances. Can you share some of the key takeaways?

Griffin: According to our research, nearly 70% of Gen Zers and millennials believe the current economic environment is hurting their ability to be financial independent adults. Recent economic news also has 75% of this group focused on their financial health and nearly 80% are actively trying to increase their credit scores.

While we are all feeling the effects of the current economic environment, the good news is 75% of Gen Zers and millennials stated they would feel more optimistic about their financial situation if they had a better understanding of personal finance, and nearly 70% are actively searching for a trusted source of personal finance information.

We believe credit can unlock significant opportunities for consumers. Education is a key component of financial health. These findings reinforce the role financial education plays in helping consumers live more financially empowered lives.

Q: What are some of the barriers consumers face in purchasing a home?

Griffin: In addition to affordability challenges and rising interest rates, a lack of financial education and spending trends are two additional factors that may be impacting millennial and Gen Z homeownership.

Most people can’t afford to pay cash for all things, and this is especially true when it comes to purchasing a home. Over 80% of millennials and Gen Z consumers understand they’ll need a good credit score to make a life milestone purchase such as a home, yet more than half don’t know how to start building credit.

At the same time, our research shows 54% of millennials and Gen Zers consider themselves at least somewhat financially dependent on their parents, with 23% stating they’re still very dependent on their parents. Additionally, spending may be one factor that is causing some young consumers to continue to rely on their parents for help, with 57% stating they have a hard time saying no to themselves when making an impulse purchase.

Q: What role does education play in increasing access to homeownership?

Griffin: As the saying goes, knowledge is power. This is especially true when it comes to increasing access to homeownership and understanding consumers wants and needs. Research such as this can help leaders in the industry gain a deeper understanding of the current challenges facing the next wave of homebuyers in order to identify opportunities to provide additional support, education and other resources.

Q: How can the mortgage industry help create a more equitable path to homeownership through education?

The mortgage industry is uniquely positioned to change peoples’ lives for the better. In addition to our millennial and Gen Z research, we also recently deployed a survey to compare the experiences of Black, Hispanic and White consumers trying to purchase a home. The number one stated barrier for Black and Hispanic consumers who aspire to own a home is not knowing where to start.

Consumers reported a lack of discussion about money and credit in general while growing up – a sentiment that rang especially true when it came to homeownership. Many are unaware of reliable sources of information they can trust. At the same time, this research showed that 58% of Black and Hispanic consumers who were denied a mortgage do not know what they need to do to get approved in the future.

This research reinforces the importance of knowing your customer, understanding their journey and meeting them where they are. Listening to the challenges consumers encounter and imparting knowledge is one way the mortgage industry can help them prepare to become homeowners. Providing consumers with educational resources and tailoring communications with these findings in mind is an important and easy-to-implement step towards making homeownership available to more people.

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