Reaching First-Time Homebuyer Credit Union Members

In 2019, more than 2 million first-time homebuyers purchased homes, representing more than half of all purchase loans. For credit unions, helping members achieve homeownership is an important relationship building milestone.

Credit unions have a long history of actively encouraging healthy savings behaviors in members, making them ideal partners on the journey to homeownership for first-time homebuyers. As credit unions market to first-time homebuyer members, they should keep in mind market conditions that will uniquely impact this segment of homebuyers. Then, credit unions should look for ways to help their members make the transition to homeownership as seamless as possible.

Focus on Education

Members look to their credit unions as a source of education for several significant financial issues, particularly around responsible saving and spending practices. As an extension of this trust, credit unions should be prepared to guide first-time homebuyer members through the process of applying for a loan and the mortgage origination experience.

Credit unions should consider offering educational seminars throughout the year to members to discuss local real estate trends, mortgage rates and how to prepare for the homebuying process. The National Association of Realtors noted that 87% of first-time homebuyers start the process online, making it crucial that credit unions enhance their web presence around mortgage-related services and add content to their websites to support these ongoing homebuyer education initiatives.

Members’ Concerns Around Affordability

As home prices continue to rise across the nation and wages have stagnated, many members are wisely concerned about how to tackle the affordability issue. Many first-time homebuyers, particularly those members looking for lower price point homes, have found the market inventory limited. According to a recent NerdWallet article, in October 2019, the nation had a 3.9-month supply of existing homes for sale. Normally, a supply under six months puts homebuyers at a disadvantage. This is in part due to the absence of new construction inventory; as the cost of new construction has risen substantially in the past few years, builders have focused on higher cost properties. As members may end up purchasing older properties in need of renovations, credit unions have an opportunity to educate them about how renovation loans can help them turn those “fixer uppers” into their dream homes.

Along the way to homeownership, some members would appreciate the chance to turn to a trusted financial partner to discuss how to save for their new homes. Credit unions can help members navigate the decision on whether waiting for their financial situations to improve outweighs the likelihood of inventories continuing to drop and costs rising further.

Down-Payment Trends

First-time homebuyers often believe the myth that a 20% down payment is required in order to get loan approvals. The reality is that most first-time homebuyers make a smaller down payment without damaging their ability to gain loan approval or competitive interest rates. In 2019, according to the National Association of Realtors, 94% of first-time homebuyers used mortgage financing with an average down payment of 6%. Credit unions can work with members to show different loan and down payment options that make the most sense for their financial situations.

Reaching Out to First-Time Homebuyer Credit Union Members

As first-time homebuyers continue to grow in number year over year, this demographic represents a significant change in the market. In 2019, one out of every three homebuyers were first-time homebuyers. Many credit unions have assumptions about these homebuyers that may not necessarily be true.

Recently, the National Association of Realtors reported that 70% of first-time homebuyers were married or unmarried couples, with 65% of all homebuyers being child-free. The study even noted that some millennials are purchasing homes because of their pets, not children, contrary to popular belief. To attract this mixed group, credit unions should focus on diversifying their messaging to members and assuring them that they do not need to fit into a “traditional” buyer persona to purchase a home.

As more members become first-time homebuyers, credit unions have a golden opportunity to help this group along the way. Many members value their credit unions as trusted advisors and will appreciate education and help during the first-time homebuying process.

Credit unions have a wealth of tools and educational opportunities to help these potential buyers achieve the dream of homeownership, and members, in turn will value these financial institutions’ help during a challenging and often stressful milestone in their lives.

You can also find this article published on the CUNA Councils website.

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