Millennials, the population cohort whose members were practically born with electronic devices in their hands, are generally considered the most likely to finance a house through a totally automated process.  But even they want some hand-holding, according to a recent survey.

Millennials – generally, folks born in 1982 or later – are the most likely to start the mortgage process online.  But many of them still want to talk to a real, live person to seal the deal, according to a study by Ellie Mae, a loan origination system used by numerous lenders.

Three out of 10 millennials used a high-tech/personal combination to obtain their mortgages.  That surpassed Gen Xers, at 28 percent, and baby boomers, at 20 percent.

Ellie Mae polled more than 3,000 borrowers between the ages of 18 and 70 last December, hoping to pass along some useful information to the lenders that use its mortgage software and solutions.

Some of the findings caught CEO Jonathan Corr off-guard.

Corr said he was surprised by the high percentage of electronic-savvy millennials who are obtaining their first mortgages through the Federal Housing Administration (FHA), the stodgy old government agency still using outdated software.  (Does the computer language FORTRAN ring a bell?)

FHA-insured mortgages have been a traditional first conduit into homeownership for generations of Americans.  And according to the Ellie Mae study, 35 percent of millennials surveyed took their initial step onto the housing ladder with a government-backed loan.

The study suggested that the FHA holds the same appeal to this latest generation of first-time buyers as it has for those who went before them.  That is, it is attractive to buyers carrying high amounts of student debt – which millennials have more of than any previous generation – and those who haven’t been able to accumulate enough cash for a sizeable down payment.

Others in the mortgage lending business are seeing similar patterns.  For example, in credit unions, which have increased their mortgage originations steadily over recent years, FHA lending now accounts for a full 50 percent of their lending portfolios.

Credit unions, like other banking institutions, have to be up to snuff technologically when a millennial wants to open an account.  But more and more of their new members, after starting accounts online, want to come into the branch and talk to someone face-to-face about getting more connected to the world of finance.

“Younger members may come in for financial advice,” says Jason Schwabline, senior vice president of product development and strategy for Alogent, a Georgia-based financial software firm with 1,400 credit union clients.  “They want a real person to tell them how to plan a savings strategy, how to finance a car, how to pay down their student debt.  And the branch officer who counsels them may become not only a trusted adviser, but an influencer of that millennial’s financial decisions for a long time to come.”

Overall, the Ellie Mae survey found that 57 percent of all borrowers filled out their mortgage applications the old-fashioned way, completely in person, while 28 percent used the hybrid online/in person method.  Just 11 percent applied for mortgages totally online.  So much for paperless mortgages.

Thirty-five percent of millennials said security was the most important factor in their application process, significantly higher than the 23 percent who sited speed as their primary reason.  Twenty percent wanted simplicity, while 12 percent rated transparency the biggest factor.

“I was surprised to see that security, rather than speed, was the most important factor for millennials in applying for a loan,” says Ellie Mae’s Corr.

Meanwhile, speed was ranked most important to both Gen Xers (34 percent) and baby boomers (36 percent).  And in the battle of the sexes, security topped the women’s list (32 percent), while speed was most important for men (30 percent).

Speaking of the sexes, Ellie Mae, which also keeps an eye on millennial trends on a monthly basis, says male millennials are twice as likely to take out mortgages as females (65 percent vs. 32 percent).  Just over half of millennial borrowers are married, and their average age is 29.6 years.

Their average credit score?  A good, but not excellent, 722.  Average mortgage amount?  A relatively modest $183,907.


Lew Sichelman is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications.  Freelance writer Mark Fogarty contributed to this report.