Mortgage lenders are looking for ways to reach the rapidly growing Hispanic homebuying market.
According to a Lenders One survey in March, 71% of mortgage lenders surveyed identified Hispanics as one of the top demographic groups presenting the best growth opportunities in 2016, second behind millennials at 79%.
At 57 million strong, Hispanics make up roughly 18% of the U.S. population, and are the second fastest growing ethnic group behind Asians, according to a Pew Research Center September 2016 report. In addition, the report found about a quarter of Hispanics, or 14.6 million, were millennials between the ages of 18-33 in 2014.
As these numbers continue to grow, it will mean even greater opportunities for banks and other mortgage lenders, according to industry experts.
If the mortgage-lending industry wants to gain a larger share of the Hispanic market, companies should consider adding more minority faces to their payrolls, according to Gary Acosta, co-founder and CEO of the National Association of Hispanic Real Estate Professionals.
“Banks have to diversify their workforce. That means adding people with more cultural competency and language skills,” he said. “You will need people who can develop these [customer] relationships within the Hispanic community.”
Jason Riveiro, chief marketing officer for NAHREP, said a diverse workforce needs to be inclusive of women and minorities, a change that could go a long way to help break down stereotypes about the Hispanic community. By increasing staff diversity, banks and other mortgage lenders could learn how to better serve the Hispanic community.
“The Hispanic consumer is evolving, and if you think this group doesn’t have money to spend, you’re wrong,” Riveiro said.
Hiring bilingual staff is important to serving Hispanic customers, according to Dustin Hobbs, communications director for the California Mortgage Bankers Association. Hobbs said association member Suzanne Livingston, owner of Residential Wholesale Mortgage, Inc., told him she increased sales to Hispanic homebuyers after hiring three Spanish-speaking licensed mortgage lending officers. She also ramped up education and networking efforts in her community.
“We have increased our Hispanic originations from 8% to 10%,” Livingston said in an email statement to Hobbs. “In addition we are always looking to recruit more Hispanic originators.”
Wells Fargo Bank and NAHREP have teamed up to push this dream of Hispanic homeownership into reality. In a September 2015, Wells Fargo issued a press release pledging to increase lending to Hispanic homebuyers.
“Wells Fargo’s goals over the next 10 years include a projected $125 billion in mortgage originations and a goal of $10 million to support a variety of initiatives that promote financial education and counseling for Hispanic homebuyers,” the release stated.
To serve the Hispanic community, Frank Fuentes, national vice president of multicultural community lending at New American Funding in Tustin, Calif., said mortgage lenders need more resources and products relevant to the demographic they serve.
“With underserved markets, the Hispanic market, in particular, you cannot rely on automated underwriting engines to make a decision on these types of loans that require manual underwriting,” Fuentes said.
Thanks to new products launched by Freddie Mac and Fannie Mae, lenders now have a host of loan origination tools that better serve the Hispanic community, Fuentes said. Programs such as Fannie Mae Home Ready and Freddie Mac Home Possible Advantage will give lenders more lending muscle in underserved markets because these programs only require 3% down payment and can go as low as 620 on a credit score, he said.
The right message
Lenders also should consider using some of their marketing budget on print and broadcast media advertising that serve the Hispanic market, Hobbs said.
But before placing TV and radio spots with Univision or print ads in Hispanic newspapers, it is important for companies to know how their brand is perceived, said John Seroka, principal with Seroka Brand Development, with offices in Wisconsin and California. He said a brand audit is a great tool to help guide the messaging.
“The audit identifies where the brand sits right now in the minds of the internal audience,” he said. “That’s where you find out how people define the brand, how they feel it compares to competitors, and how leadership is promoting the brand.”
Many lending institutions may want a larger share of the Hispanic market for their customer portfolio, but only those organizations with nimble execution and smart adaptive marketing outreach will be successful, according to Acosta.
He predicts many mortgage lenders will realize losses far sooner than relishing gains if they are not attentive to Hispanic customers’ needs. “When someone takes 20% of your market share in your neighborhood, that will get your attention,” he said.
Freelance writer Elise Oberliesen contributed to the writing and research of this article.