Ethos Lending offers all applicants the opportunity to participate in a survey as part of their loan process. Over 70% of applicants agree to respond to at least part of the survey, though fewer answer every question. We use the survey to learn valuable information about our borrowers and identify trends in the market and potential ways to enhance the Ethos Lending customer experience. This survey has powered some recently discovered trends.
Part of the mission of Ethos Lending is to provide transparency and expertise in the most confusing financial process that exists today: buying a home and getting a mortgage. We are particularly delighted when we can help first-time homebuyers to better understand the process and land a market-leading rate.
While first-time homebuyers comprised less than 7% of our clients in 2016, there has been an explosion of new first-timers coming to our platform since 2017 and through 2018.
We see several causes for this. First and foremost, we credit the improving economy, which began in 2009 and continues to the present. Millennial households are finally seeing incomes and savings sufficient to reach this important milestone. Second, we notice several other demographic trends working in favor of first-time homebuyers.
While it may not seem very long ago that we saw daily articles in our newsfeeds claiming that so-called young, irresponsible millennials are eschewing ownership in favor of experiences, the sharing economy, and avocado toast, times have changed. Millennials are now solidly in their late 20s and 30s, which has given this generation new priorities. In addition, while they are still less well-off than their parents at their age, both in real incomes and in overall wealth, 10 years since the financial collapse has provided adequate time to catch up.
As further proof of that trend, we have not seen a decline in the age of Ethos Lending applicants. The first-timer 30-somethings are joining their older, multiple homebuying counterparts in equal proportion as before. We are just seeing an increasing proportion of older people who are first-timers. Simply put, we are seeing the rise of a generation that had the rug pulled out from under them during the Great Recession now entering the market en masse.
A further difference we will explore in our next post is trends in marital status and the presence of co-borrowers on loan applications, which may be an important new development in how first-time buyers are qualifying for loans. Ethos Lending is gearing up to meet this emerging trend with greater flexibility in accommodating co-borrowers than many traditional lending institutions and providing transparency in an easy-to-navigate experience for first-time homebuyers.
In conclusion, it is an exciting time to be a first-time homebuyer and there are great financing options available for people ready to take that step. The improving economy has allowed many more people to enter the market for the first time, and while they share some traits with the generation that came before, we also see some intriguing new developments, which we’ll detail in posts to come.
Wolf Rendall is the Director of Data Science at Ethos Lending. He is a long-time data scientist passionate about housing and finance. He studied at UC Berkeley and has applied machine learning to real estate industry problems at Ethos Lending, Sofi, TenX, and Trulia.
Outside of real estate, finance, and technology, he is a huge nerd for classic film and anything having to do with California.