New Study Highlights Mortgage-Qualified Consumer Groups

Interest rates have dampened demand for mortgages, but some areas remain prime opportunities for lenders, according to a new study from TransUnion.

The study, “Where Will Growth In Mortgage Originations Come From?,”  analyzed the credit-active U.S. population between Q2 2017 and Q1 2022. It flagged consumers with a variety of traits, such as VA eligibility and income status, who withdrew their applications or may have been turned down for a mortgage.

The results showed mortgage-qualified consumer segments that have “purchase origination potential.”

Of the approximately 121 million low- and moderate-income (LMI) consumers studied, 95% were credit eligible for a mortgage.

Buyers should have at least a 620 credit score when applying for a conventional loan. 86% of VA-eligible consumers were found to have credit scores above 620 and are mortgage eligible.

Of self-employed consumers (about six million), 67% of renters and 93% of homeowners showed credit scores greater than 620.

The number of eligible consumers who are likely renters has grown 4% since Q2 2019, a huge upturn from the 2017-2019 era, which saw only a 1% increase in likely renters. Eight million analyzed renters were turned down or withdrew their mortgage application, of which five million are classified as LMI.

The number of renters with credit scores above 620 who may qualify for GSE loans rose from 97 million to 100 million in Q2 2022.

“As each consumer has unique needs, it’s important to use insights tailored to the individual to help educate people on their journey to homeownership, whether that be information around the product and down payment assistance they qualify for or assistance to get mortgage-ready,” said Joe Mellman, senior vice president and mortgage business leader at TransUnion.

Reaching these potential borrowers is a potential pitfall for lenders, but possible, according to Lyn Webb, director of UK-based Mortgage Saving Experts.

Webb recently told Mortgage Introducer that brokers can take advantage of a tough market by spending their new-found free time networking.

Webb also recommended reaching out to past clients.

“Contacting old clients and offering your services is also a must, especially given the economic climate; if clients are looking to reduce bills rather than cancel policies, brokers should look to offer their clients longer-term mortgages,” Webb said.

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