A closer look at mortgage inquiry trends

The second half of 2017 saw mortgage inquiry volumes fall from the peaks achieved in the first half of the year. But with 295,748 inquiries from 222,196 applicants, the year as a whole still delivered inquiry volumes 14% higher than those seen in 2016.

Of those applicants, 34% were Millennials (born 1994 to 1980), 40% were Generation X (1979 to 1965), and 23% were Baby Boomers (1964 to 1946). Despite the fact that the average home is 12% costlier than it was in 2015, this represents a significant shift towards the younger end of the scale, when you consider that only two years ago the distribution of inquiries was 28% to Millennials, 42% to Generation X, and 28% to Baby Boomers.

These Millennials are no more risky than older borrowers. However, it seems being drawn by a desire for choice or pushed by an inability to access the best rates first time around, Millennials do engage with more financial institutions when taking out a mortgage. For every consumer making an inquiry, the average Baby Boomer inquires at 1.2 unique institutions, the average Generation X’er at 1.3, and the average Millennial at 1.5.

Thus, while the mortgage industry is benefiting from Millennials’ growth momentum, its constituents must also compete more aggressively amongst themselves for customers, keeping downward pressure on prices high.

The rising cost of housing, though, may be behind the fact that the proportion of inquiries coming from first-time home buyers is decreasing despite younger borrowers being naturally more likely to seek their first mortgage. Around 90% of Generation Z (born after 1994) mortgage applicants are applying for the first time, compared to 60% of Millennials, and just over 40% of Generation X’ers and Baby Boomers.

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For more insights into the Hong Kong consumer credit market, read TransUnion’s latest quarterly Industry Insights Report and other articles here.