Oct 05 2006

COOL Solutions: First-time Home "Yers"

Report  
Number  
123

Many consider home ownership to be the most tangible manifestation of the American Dream. Indeed, the home is the largest and most important asset for nearly all consumers. The study examines the most important financial purchase most individuals ever make: the first home.

Tammi S. Feltham, PhD
University of Manitoba
Report Number 123

Executive Summary

It would be difficult to overestimate both the meaning and value of home ownership for Americans, the economy and our culture. A home is the largest and most significant investment consumers will typically make. Mortgage lending and home equity loans have fueled the expansion of the U.S. economy for the past several years.

The credit union industry, though, is new to the mortgage market; they first received the regulatory authority to offer 30-year mortgages in the late 1970s. Unlike auto lending, where credit unions had 18.4% of the U.S. market share at the beginning of 2006,1 credit unions have remained poor cousins at the mortgage table with a slim 2.18% of originations in 2005. Today, credit unions are viewing the mortgage market with a heightened sense of necessity

What is the research about?

In the study that follows, University of Manitoba Professor Tammi Feltham logically lays out the motivations, experiences and levels of satisfaction of young adults’ first home purchases. You will discover a variety of opportunity areas to guide your credit union to be well positioned to serve the next generation of home buyers. Although credit unions are relative newcomers to the mortgage game, this study illustrates that first-time home buyers find the mortgage process to be complex and confusing, and they are in need of more informed mortgage providers.

What are the credit union implications?

Young consumers are failing to join credit unions in the numbers needed to ensure a healthy future for the movement. This is due, in part, to a lack of awareness about credit unions and their services and products—especially mortgages. This survey also indicates low levels of information and consumer confidence in the knowledge about aspects of the home buying and financing process. Since the credit union’s core mission is self-help and education, providing relevant education during the home buying process can serve as a significant advantage.

This report is sponsored by PSCU Financial Services.