As interest rates remain volatile and demand continues to suffer, lenders across the industry are seeking new avenues to reach borrowers. Often, that means analyzing target markets to determine fresh ways to connect with growing demographics. For many, this analysis is unearthing a noteworthy trend: In many pockets of the U.S., Hispanic Americans represent a fast expanding segment of borrowers with an increasing number seeking home loans and homeownership.
Over recent years, the pool of American borrowers has evolved, with Hispanic borrowers rising as a proportional share of new homeowners. According to Freddie Mac, the Hispanic American homebuyer segment has increased by 25% in the last decade. By 2030, this growing sector will represent an estimated 56% of all new homeowners. Across the U.S., Hispanic homeownership is expanding rapidly, making this demographic a growing force in today’s housing market.
Even with the introduction of more digital tools to provide home buyers with a technology-enabled user experience, Spanish-speaking borrowers often encounter obstacles to homeownership during the lending process.
Mortgage loan applications, their terminology, and substantial documentation and information requirements pose challenges to native Spanish speakers in the early stages of home buying. In fact, limited English proficiency (LEP) is one of the most significant barriers to homeownership among Hispanic Americans, second only to credit score challenges.
How can lenders help Hispanic Americans through the mortgage process, facilitating better access to homeownership and opening up new avenues for borrower leads?
To better understand the experience of Spanish-speaking home buyers, Maxwell recently conducted a survey of more than 1,000 Hispanic borrowers. Through this survey, we sought to identify common barriers to entry, ways the industry can better support Spanish-speaking applicants and strategies lenders can use to connect with Hispanic Americans.
A need for support during the application process
Applying for a mortgage can be challenging for many Americans—and Spanish-speaking applicants are even more likely to find the process time-consuming and hard to understand. Of those surveyed, nearly a quarter (24%) took three weeks or longer to fill out the mortgage application.
That lengthy timeline caused a sizable amount to consider abandoning their application, with a third of those applicants (33%) citing that the process was too confusing and 46% saying they couldn’t get the necessary paperwork. Perhaps most disheartening, nearly half (49%) thought about giving up on their home loan because their lender didn’t provide enough support.
Much of the frustration and complexity Hispanic Americans encounter during loan application and beyond stems from LEP. Almost a quarter (23%) of respondents said that language acted as a barrier, with 34% of that segment saying they needed to bring a family member to translate in order to move through the mortgage process.
A sizable percentage (38%) also reported not being able to find a Spanish-speaking lender in their region, signifying the need for dedicated bilingual services among loan providers.
The opportunity to connect with a rising homebuyer demographic
These statistics illustrate the struggle that many Hispanic Americans encounter on the journey to homeownership, along with the strong opportunities lenders have to step up as a go-to resource for this growing borrower cohort.
With 41% choosing a local lender (credit union or bank) for their mortgage, it’s clear that these borrowers are searching for resources in their local communities to meet their lending needs. What’s less clear is which lending business will effectively connect with the Spanish-speaking audience, offering bilingual resources and creating a more straightforward, streamlined process.
In working with the lenders on our platform, many of whom serve Hispanic communities, we’ve found that the best way to connect with these borrowers is by offering an intuitive, culturally empathetic experience. To create that experience, we recently launched our Spanish-language loan app, offering a fully translated loan application with bilingual functionality from landing page to submission.
Unlike many point-of-sale systems, which rely on translators or only offer a Spanish landing page or subtitles in the loan application, our loan app provides an immersive Spanish language experience. Built with input from our in-house Hispanic American processors and underwriters, our Spanish mortgage application strengthens cultural context and retains industry-specific nuance, helping lenders attract, convert and engage native Spanish speakers.
This kind of functionality is key in building relationships with Hispanic American homebuyers. Nearly a quarter of these borrowers make their lender choice based on recommendations from family, friends or colleagues. That means the experience a lender provides is vital to growing repeat and referral business and becoming a known resource for this growing segment.
With 2023 a prime opportunity to rethink business strategies and build new lead funnels, now is the time to shape your mortgage process to better support Spanish-speaking borrowers. Doing so will help Americans into homes during a historically tough housing market while creating new opportunities for strong borrower business in years to come. To learn about catering to your Spanish speaking client base, visit Maxwell.com.