Lenders should also take note of Gen Z’s passion for the environment. They care deeply about global problems and value social responsibility from businesses. This younger generation tends to stick with brands that both reflect their values and offer customised experiences, and they expect a mutual relationship with the brand and to see a reward for their loyalty.

Digitally Savvy

This is the first digitally native demographic – they have grown up in a digital era, and they expect banking and mortgage services to primarily be conducted online and optimised for mobile devices. Further, this generation prefers interactive platforms that allow them to actively participate in the decision-making process and receive real-time feedback and transparency. Given their familiarity within the digital space, Gen Z is comfortable adopting new technologies and will gravitate towards mortgage lenders who offer innovative digital solutions that stand out from traditional options. They are talented at juggling multiple tasks simultaneously and respond well to technology that helps manage their finances alongside other responsibilities versus the typical one-off product transaction that we have seen with previous generations.

Crafting the Experience to Meet the Need

Mortgage lenders must prioritise digital transformation to attract the business of Gen Z. This demographic wants mortgage providers to offer fast and easy digital experiences end-to-end, including having smooth online mortgage application processes, quick approvals, clear communication, user-friendly interfaces, and round-the-clock access to account information and support.

Mortgage lenders could learn from the success of gamification in other sectors and use it to make the mortgage payoff process more engaging for Gen Z borrowers. For example, using interactive tools and simulations that show the financial consequences of different payment options (e.g., paying more per month versus reducing overall interest) can help Gen Z borrowers make smart financial choices with customised insights and practical suggestions.

Mortgage providers have to adjust to Gen Z’s preferred ways of doing business, which mainly involve digital platforms and mobile apps. Lenders need to offer a consistent experience across all omnichannel interactions, and given the influence of social media, the ideal journey would be a smooth mortgage experience from social media to online application processes or broker referrals. That said, brokers as a brand are not well known and those who can crack the social media market and become a familiar brand to Gen Z will differentiate themselves from their peers. Likewise, integrating mortgage services into the mobile apps of banks and financial institutions that Gen Z

already uses for day-to-day banking activities can enhance convenience and accessibility, and perhaps offer ancillary services to ease the burden of buying a first home such as securing homeowner’s insurance.

The Financial Challenge

Having witnessed economic volatility and financial crises during formative years, Gen Z tends to be more cautious and risk-averse when it comes to making long-term financial commitments. This age demographic tends to do a lot of their own research before committing to a brand and a purchase. Another challenge mortgage lenders might see in trying to attract their business is the current preference for renting over homeownership. Many Gen Z individuals prefer renting as it provides a more flexible and cost-effective alternate given the generation’s financial constraints and lifestyle preferences.

Winning Gen Z’s Loyalty

First and foremost, mortgage lenders need to help get a larger portion of Gen Z into the mortgage market. Lenders should tailor offerings to address the specific needs and challenges faced when entering the housing market for the first time, such as specialised mortgage products with features like low down payment requirements or flexible repayment options. It is vital to provide comprehensive and easily understandable advice and educate these new borrowers on the total cost of borrowing, including interest rates, fees, and potential future expenses such as property taxes and insurance. Empowering this generation with knowledge helps them make informed decisions, avoid financial pitfalls, and creates a loyal customer.

Mortgage lenders should also consider forming strategic partnerships with brands that align with Gen Z’s values and preferences, to foster long-term relationships and loyalty. Collaborating with brands known for their social responsibility and digital innovation can enhance the appeal of mortgage offerings to this demographic. Similarly, lenders should recognize Gen Z’s heightened awareness of environmental issues and increase their focus on “green mortgages,” or sustainable financing options. These initiatives incentivise environmentally friendly home purchases or renovations, appealing to the socially responsible ethos of this younger demographic.

Catering to the digital expectations of Gen Z is not just about meeting their immediate needs; it’s about securing the future of mortgage lending. Moreover, institutions that invest in top-tier digital experiences today will not only attract new Gen Z customers, but also have a prime opportunity to convert their existing customer base when they’re ready to purchase a home. Lenders who seize the moment and lay the groundwork for long-term success in the Gen Z-dominated market will win the day.

Thomas Chaplin is head of mortgage EMEA at nCino