Vision 2014: Mortgage and Millenials a New Frontier

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Mortgage and Millennials and how to target them

Marnie Applegate PNC

Michelle McLellan Bank of America

#vision2014

John Carroll Experian

Crissy Wallace Experian

2 © 2014 Experian Information Solutions, Inc. All rights reserved. Experian Public.

The Millennials Why they matter and the impact they have on the mortgage market

http://ffemagazine.com/wp-content/uploads/2014/01/news15jan4.jpg


Generational review

Greatest /

Silent

1927 – 1945

Age: 69-87

Baby

Boomers

1946 – 1964

Age: 50-68

Gen X /

Busters

1965 – 1983

Age: 31-49

Gen Y /

Millennial

1984 – 2002

Age: 12-30

Gen Z /

Digital

>2003

Age: <12


Millennials demographics Education

X

8%

23%

38%

20%

12%

0%

8%

23%

50%

12% 6%

1%

Less ThanHigh School

Diploma

High SchoolDiploma

SomeCollege

BachelorDegree

GraduateDegree

Unknown

Gen X Gen Y

Education level

Y


X Household income

Y

Millennials demographics Income

27%

43%

29%

46%

39%

16%

<$50,000 $50,000-$99,999 $100,000+

Gen X Gen Y


12% Families in Motion

14% Promising Families

27% Singles and Starters

Experian Millennials Mosaic® segments

Digital Dependents Singles who live

digital-driven, urban

lifestyles 7% Pastoral Pride


Millennials identification

The Millennials: Confident.

Connected.

Open to Change.

Generations, like people, have

personalities, and Millennials

– the American teens and

twenty-somethings currently

making the passage into

adulthood – have begun to

forge theirs: confident, self-

expressive, liberal, upbeat and

receptive to new ideas and

ways of living.

— pewsocialtrends.org


Millennials and mortgage


Unemployment impacts Riding through the various economic cycles

4.6 4.0

5.2

8.8

11.3 11.5

10.7

9.4

7.9

0

2

4

6

8

10

12

14

2005:Pre-Recession

2006:Inception

2007 2008 2009:Height

2010 2011:Pre-Recovery

2012 2013::Recovery

Pre-Recession: Young Millennials: 3-5 yrs. old & Oldest Millennials: 21-23 yrs. old During Recession: Young Millennials: 5-9 yrs. old & Oldest Millennials: 23-27 yrs. old


Unemployment rate for key MSAs

0

2

4

6

8

10

12

14

2005 2006 2007 2008 2009 2010 2011 2012 2013

An

nu

al

un

em

plo

ym

en

t ra

te

Los Angeles

Chicago

Miami

Dallas

Austin

Percent Change

2005-2013

Los Angeles Chicago Miami Dallas Austin

72% 60% 71% 15% 10%


Millennials age breakout

Millennials

2006-2013

Generation X

2006-2013

19-22 years old

<19 years old

23+ years old


Examining the period of impact

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

After

Jan 2013

Pre-recession Bubble Recovery Height Pre-recovery

Timeframe reviewed: 2005-2013

Pre-Recession

Recovery

Prior to

Jan 2006

Jan 2006 –

Dec 2008

Jan 2009 –

Dec 2010

Jan 2011 –

Dec 2012

During Recession


Key MSAs

Millennial concentration Where are they?

Age breakout

18*–24

35% 25–30

65%

* Only >= 18 due to

credit profile High Low

0.77% 0.25%


Millennials credit health

Mortgage debt

Debt to income

Mortgage

performance


Indebtedness comparison nationwide Average current debt balances by generation

As of Dec 2013

+27%

+19%

+58%

$2,179 $1,899

$6,352 $2,669

$18,063 $14,663

$32,351

$23,563

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

Generation X Millennials

Retail Bankcard Auto Student Loan

13%

58%

19%

27%

$210,107

$151,758

$-

$50,000

$100,000

$150,000

$200,000

Gen X Millennials

Mortgage Only 28%


Indebtedness comparison nationwide (non-mortgage)

Average balances by recessionary period

$-

$10,000

$20,000

$30,000


Generation X

PreRecession Bubble Height PreRecovery Recovery

84%+ 27%+ 71%+ 13%+

$-

$10,000

$20,000

$30,000


Millennials

136%

+

59%+ 24%+ 211%

+


Indebtedness comparison – mortgage only Average balance by recessionary period

$169,022

$204,984 $210,107

$145,982 $142,868

$151,758

$100,000

$150,000

$200,000

PreRecession Recession Recovery

Gen X Mortgage Millennials Mortgage

30% 28%

14%


Experian ability to pay models

Models developed with verified income data that included wages, investments, alimony, rents, etc.

Income InsightSM outputs dollar amount of total income rounded to nearest thousand ranging from $15,000 to $990,000

Income Insight W2SM outputs dollar amount of wage income rounded to nearest thousand ranging from $1,000 to $990,000

Income InsightSM

Offered as an add-on to Income InsightSM

Debt-to-Income InsightSM provides total debt

Debt-to-Income Insight W2SM provides individual debt

Premier AttributesSM available for calculation – total monthly payment:

► All debt

► First mortgage debt

► All mortgage debt

This specific research:

Monthly payment DTIs

Debt-to-Income InsightSM


Income Insight W2SM score Average Income by generation

$40

$30

$45 $46 $47

$23 $19

$26 $28

$30

$-

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50


An

nu

al

Inc

om

e (

Th

ou

sa

nd

s)

Generation X

Millennial

43%

36%

AVG

AGE

31 33 35 37 39

17 19 21 23 25


Debt-to-income comparison Average monthly payment to income ratios

10 10 8 8 8

10 11 9 9 9

30 31 28

26 25

35

39

35

32 31

0

20

40

60


DT

I S

co

re –

Mo

nth

ly p

aym

en

t / in

co

me

Gen X DTI (less mortgage)

Millennials DTI (less mortgage)

Gen X DTI

Millennials DTI


Predicts risk of borrower

► Likelihood of future serious delinquencies (90 days late or greater)

► Any type of account

24-month performance

Score range of 300-850

► Higher scores represent a lower likelihood of risk

► Lower scores are higher risk

VantageScore® 3.0 Model overview

A = Super-prime 781-850

B = Prime 661-780

C =Near Prime 601-660

D = Sub-prime 500-600

F = Deep Sub-prime 300-499


Average VantageScore® 3.0 comparison Generation X vs. Millennial

634 634 636 640 643

619 611 612 614 617

400

500

600

700


Va

nta

ge

Sc

ore

® 3

.0

Recessionary timeframe

Generation X Millennial


Average VantageScore® MSA comparison Each by recessionary period

606 617 627 629 635

600 603 618 623 628

608 607 622 628 633

500

600

700

800

Dallas Miami Austin Los Angeles Chicago

Millennials

Scores also on the uptick, recovering little slower

618 630 638 644 650 627 624

647 642 652 637 630

657 650 659

500

600

700

800

Dallas Miami Austin Los Angeles Chicago

Generation X


Scores on the uptick


27%

31% 31%

2%

4%

7%

0%

10%

20%

30%


Average percent of consumers with mortgage trade on file

Generation X Millennials

Mortgages comparison nationwide By recessionary timeframe

Up 126%

Up 67%


Mortgages comparison by MSA Average percent of consumer with first mortgage trades

21% 21%

31% 35% 34%

0%

10%

20%

30%

40%

Los Angeles Miami Dallas Austin Chicago

Generation X

PreRecession Height Recovery

3% 3%

6% 7% 6%

0%

10%

Los Angeles Miami Dallas Austin Chicago

Millennials


Credit performance – ever 60DPD By recessionary period

12%

22%

26%

15%

17%

13%

0%

25%


Number of consumers with first mortgage trade 60DPD

Generation X Millennial


Millennials current view

Average mortgage debt: $151K

Average DTI:

9% monthly,

31% including mortgage

Average mortgage performance:

13% 60DPD ever

Data as of Dec 2013


Millennial targeting

Marnie Applegate

PNC

Michelle McLellan

Bank of America


How to attract the RIGHT Millennial population


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Vision 2014: Mortgage and Millenials a New Frontier

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Transcript of Vision 2014: Mortgage and Millenials a New Frontier