Mortgage lending professionals are feeling optimistic about the 2016 housing market.

A March survey from the Lenders One mortgage barometer found that lending professionals are feeling optimistic about the 2016 housing market.Sixty two percent of mortgage professionals believe mortgage purchase production will rise this year.1

Millennials, Hispanics and Non-Traditional Buyers are the Keys to Growth

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Of the 200 participating lending professionals, 62 percent believe mortgage purchase production will rise this year and 87 percent believe the mortgage purchase market will be somewhere between somewhat and extremely active. 

Daniel T. Goldman, Interim CEO at Lenders One, explained the significance of these numbers: 

"The strong confidence levels we're seeing among lenders highlight the continued bounce back from one of the most challenging real estate and lending environments in U.S. history," Goldman said. "In an environment where lenders can once again focus on business growth initiatives, it will be more important than ever for mortgage professionals to have access to the tools and ongoing training they need to capitalize on these emerging trends."  

These emerging trends include the influx of millennials, Hispanics, non-traditional and boomerang buyers into the housing market. When asked which groups present the best growth opportunities, 79 percent of mortgage professionals named millennials and 71 percent identified Hispanics. Trailing just behind these two groups were non-traditional buyers - those who purchase rental and vacation homes - and boomerang buyers, those who are now able to obtain a mortgage after a bankruptcy or foreclosure. Seventy percent of mortgage professionals said the former represent a key growth opportunity and 68 percent mentioned the latter.

The Idea that Millennials aren't Buying is a Myth 

It is no surprise to see that mortgage professionals have identified the Hispanic buyer market as home to a key growth opportunity in 2016. Many reports have been released demonstrating that Hispanic homeownership is indeed on the rise, but there seem to be more conflicting opinions about what's going on with millennials and the housing market.

Some experts say millennials are entering the housing market in droves, while others maintain they are being edged out. It's starting to seem like it's possible for both sides to be right. What is known, however, is that a large portion of millennial homebuyers are a huge force in the housing market right now. In fact, they currently comprise 35 percent of all homebuyers in the U.S., making them the largest home buying generation in the country.2

Millennial homeownership is on the rise as renting increasingly becomes less affordable than buying. Also, millennials are saving money - about 8 percent of their income on average - and have begun saving at earlier ages than the generations who came before them. Through activities like coupon sharing and decisions like living with their parents, millennials are finding ways to save up for that down payment.

Finally, it is getting easier to qualify for loans as new programs - like the Fannie Mae HomeReady program that requires only a 3 percent down payment - spring up to help cash-strapped buyers. Many millennials are settling down in the suburbs, where it has proven to be cheaper to own a home than in urban areas.3

Millennials grew up during a time of great economic disparity, and as a result they are more motivated to save. According to a Bankrate report, millennials are the generation that is currently most comfortable with their financial situation, including savings, net worth and debt.4

"Millennials have a greater inclination toward saving, for both emergencies and retirement, than we've seen from previous generations," explained Bankrate Chief Financial Analyst Greg McBride. "Much of this is attributable to the financial crisis and Great Recession coming during the financially formative years for many millennials."

The Bottom Line

Unemployment rates are decreasing in the United States, and as such, the amount of disposable income is rising for many Americans. That availability, along with low mortgage rates, should lead to an active housing market. So far, this spring has in fact been a seller's market, with buyer demand high and inventory remaining low. 

As the economy continues to improve and more Americans look to achieve the American Dream of homeownership, it seems millennials, Hispanics, non-traditional buyers and boomerang buyers will be leading the charge. 


2National Association of Realtors
3The Mortgage Reports