Studying the New Generation of Homebuyers

Editor’s note: This feature originally appeared in the July issue of MReport, out now.

D. Steve Boland, Head of Consumer Lending at Bank of America, also heads the bank’s retail segment for Consumer and Small Business and is a member of Bank of America’s Management Committee. With over three decades’ experience in the industry, Boland is also one of the Vice Chairs for Bank of America’s Global Diversity and Inclusion Council. He began his career in financial services at NCNB, a predecessor of Bank of America and has since then served in various positions including Home Loans Fulfillment and Underwriting executive, National Mortgage Outreach executive, and Global Wealth and Investment Management Mortgage Solutions Group executive.

Over the course of his career, Boland has been recognized with several prestigious professional honors including being named to Black Enterprise Magazine’s 2017 list of the Most Powerful Executives in Corporate America, the 75 Most Powerful Blacks on Wall Street in 2011, and 75 Most Powerful African-Americans in Corporate America in 2005. Most recently, he was awarded Bank of America’s Black Executive Leadership Council Vanguard Award for being at the forefront of advocating, sponsoring, promoting, and overall investing in Black talent.

Boland spoke to MReport on the new generation of homebuyers, what it means to be a sustainable lender, and how lenders can balance the digital experience with a personal touch.

 

As someone who has been in the lending business for more than two decades, how have you seen the industry change and where do you project the housing market heading in 2020?

The industry has evolved tremendously—just look at the transformation from paper to digital. Beyond that, and perhaps more importantly, is the focus on responsible and sustainable lending, as well as accessible opportunities for our diverse communities. We know that saving for a down payment and closing costs is the biggest hurdle to becoming a homeowner. Recognizing
the challenge this can bring to otherwise eligible buyers, we just announced a $5 billion affordable homeownership initiative to help 20,000 additional people purchase homes, all in a comprehensive effort to help people who can afford monthly mortgage payments overcome the hurdle of coming up with the initial costs of homeownership.

Programs like these can help individuals who may have never thought homeownership was possible. My role as head of Consumer Lending is to help people who dream of homeownership make it a reality. As these inclusive programs take effect, I believe the housing market in 2020 will see additional growth, particularly as interest rates stay low and consumer financial health remains solid.

What can homebuyers expect from the market in the months ahead?

It’s a great time to buy. The economy is doing well, the overall consumer appetite is healthy, and potential homebuyers can expect continued low interest rates. However, we are seeing home prices driven market by market, so it could be more challenging depending on where you are making your purchase. Ultimately, the market has plenty of room to grow.

The most recent Bank of America Homebuyer Insights Report indicated a new generation of homebuyers were coming into their own. How is Gen Z different from millennials and Gen-Xers?

While it may be surprising given their age, more than half of prospective homebuyers between the ages of 18 and 23, Gen Z, have already started saving to buy a home. And 59% of Gen Zers are looking to buy within the next five years, which means they’d own a home before the age of 30. While some may see Gen Z and millennials as similar, the interesting difference that’s coming to light is how intentional Gen Zers are being about preparing to own a home. In fact, Gen Zers said that if they had $5,000, they’d rather save it for a down payment (80%) vs. plan their dream wedding (20%).

Both Gen Zers and millennials are willing to make sacrifices to buy a home (Gen Z 94% vs. millennials 93%), but Gen Z is willing to make more drastic changes. Compared to millennials,
Gen Z is more willing to get a second job (48% Gen Z to 38% millennials) and more than twice as likely to attend a university that will leave them with less student loan debt (34% Gen Z vs
15% millennials).

How important is it for lenders to have that personal touch in an increasingly technology-driven lending environment?

A personal touch is key. At Bank of America, we frequently refer to “high-tech high-touch” to describe the ideal combination of digital and personal interaction, based on individual desires and needs. We’ve seen the value of this integrated approach through our Digital Mortgage Experience. To complement digital tools, borrowers can receive customized guidance and advice by consulting a lending specialist. Often we find that our clients prefer to complete most of their loan application through a digital tool, but then they choose to have a conversation with a lending expert who will assess the homebuyer’s needs and loan choices and help them feel confident in their decisions.

What are some of the steps that mortgage lenders can take to streamline and enhance the lending experience for borrowers?

Get rid of all the paper. For example, we’ve digitized almost all of the document and data collection, reducing the 330 fields of data entry on a standard 1003 to less than 10 fields of input for our borrowers. We also recently introduced prequalification and preapproval capability in our Digital Mortgage Experience to give clients an earlier look at what they can afford and how much they can qualify for … before they go house-hunting. With this information in hand, they can be more knowledgeable and competitive buyers when they find a property.

Self-directed tools are also important. They include educational platforms that provide access to calculators, videos, and other easy-to-digest information that reinforces the guidance their
lending officer provides. Lastly, communication channels should be wide open. Clients consume information and transact in a variety of ways, so offering them multiple options is vital. For
example, we know that people rely on texting to communicate in their everyday lives. So, we launched “Text Us,” which gives clients quick, easy mortgage, auto, or home equity financing info by simply texting the word “mortgage,” “auto loan,” or “home equity,” depending on their needs, to 226 526."