Now that summer is approaching, the year is nearly halfway over. This midpoint is the perfect time for mortgage lenders to assess their current strategies and look for emerging opportunities.
So far, 2025 has seen subdued purchase and refinance activity, with rates still hovering in the mid-to-high 6% range. President Trump’s erratic tariff policy has stalled the Federal Reserve’s intended rate cuts, adding to the sluggishness.
Even so, there is still plenty of opportunity for lenders who are willing to look for it. In fact, Mortgage Bankers Association’s (MBA) data shows that mortgage applications increased 11% in the first week of May from the week prior.
So, how can you secure your slice of 2025’s increasing mortgage business? Below, we’ll discuss the most potent markets to target, how to approach them, and some tools from Certified Credit that can support your success.
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3 Borrower Segments to Focus on in 2025
With average mortgage rates stuck in the 6% range, many homeowners are still reluctant to swap out their low-rate loans. Over 40% of existing U.S. mortgages date back to 2020 and 2021, when rates were at their lowest. Borrowers with these low rates have little incentive to refinance their loans or purchase a new home in today’s market.
While these homebuyers may be off the table temporarily, there are still plenty of segments driving lending activity, including:
- First-time homebuyers
- NextGen homebuyers
- Borrowers from underserved communities
Let’s take a look at how you can effectively engage these three promising demographics:
#1 First-Time Homebuyers
According to Intercontinental Exchange’s May 2025 Mortgage Monitor Report, first-time homebuyers drove a record share of purchase lending activity, accounting for an impressive 48% in Q1 2025. This trend makes sense, considering that first-time homebuyers don’t face the same rate-related lock-in effect as repeat buyers.
While first-time homebuyers are buying a lot of homes, they’re doing so with smaller down payments. On average, first-time homebuyers put $49K down in March 2025, whereas repeat buyers provided $134K. These averages differ notably per loan program:
- First-time homebuyers using conventional, conforming loans put $77K down on average.
- First-time homebuyers using Federal Housing Administration (FHA) loans put down $16K on average.
- First-time home buyers using Veterans Affairs (VA) loans put down less than $10K on average.
Default Trends Among First-Time Homebuyers
While first-time homebuyers are a valuable segment to target, they come with unique risks that lenders should be aware of. Recent data show that these borrowers have higher rates of defaults.
However, first-time home buyers also hold on to their mortgages longer than repeat buyers. In other words, they’re less likely to refinance early or sell the home and pay off their loans prematurely. Thus, they have the potential to provide a more stable, long-term revenue stream than repeat buyers as long as you manage their default risk properly.
How to Attract and Approach First-Time Homebuyers
Since first-time homebuyers are the greatest movers and shakers in the current market, it’s important to tailor your lead generation strategy to their needs. Here are some ways you can do just that:
- Offer relevant education – Buying a home for the first time can be a daunting process. To put first-time homebuyers’ anxieties at bay, provide them with ample educational content about the steps involved. Sharing this content online can help you attract first-time homebuyers’ attention and enhance their education in one fell swoop.
Read More: What You Need to Know As a First-Time Home Buyer - Outline down payment requirements per loan program – Saving up a sufficient down payment is often the biggest hurdle homebuyers face. You can help borrowers proceed with confidence by clearly explaining their down payment requirements. Some aspiring homebuyers may be surprised to learn that they can get into the housing market with a much lower down payment than they originally anticipated.
- Highlight relevant down payment assistance (DPA) programs – Another way you can give first-time homebuyers a boost is by sharing the DPA programs available in their area. Whether in the form of grants or low-cost loans, these tools can help borrowers achieve mortgage readiness much faster.
Read More: 90 Days to Mortgage Readiness: Preparing Your Borrowers for Success
#2 NextGen Homebuyers
First-time homebuyers are increasingly made up of younger generations. People under the age of 35 accounted for over half of financed, first-time home purchases in Q1. One in four of those loans went to Gen Z borrowers specifically.
These young borrowers are shopping for homes in more affordable states, like Kentucky, Indiana, and South Dakota. They’re also relying more heavily on Federal Housing Administrative (FHA) loans. In contrast, costly markets on the coast, like California, and D.C., are struggling to attract the same level of Gen Z activity.
How to Attract and Approach NextGen Homebuyers
If you want to appeal to this burgeoning group of young borrowers, just follow these steps:
- Establish a strong online presence – As digital natives, Millennials and Gen Zs spend a significant portion of their lives online. Millennials clock in around 8.5 hours a day on their devices, while Gen Z surpasses them with an average daily screen time of 10.6 hours. Thus, one of the easiest ways to get in front of these potential applicants is by curating strong social media profiles and sharing engaging content online whether that’s in the form of credit education or NextGen success stories. Read More: Credit Education for Gen Z and NextGen Homebuyers
- Be authentic in your communications – In a world of AI bots and pushy influencers, Millennials and Gen Zs increasingly value authenticity from their service providers. Thus, don’t be afraid to give these prospective borrowers a genuine glimpse into your personality and values as you curate your online presence. Read More: Building Your Personal Brand Using Authenticity and the Right Tools
- Focus on affordability – Today’s young borrowers are up against record-breaking affordability challenges. What’s more, many are also navigating high levels of consumer and student debt. You can help these applicants buy a home more affordably by teaching them how to strengthen their credit, reduce their consumer debt, and determine the most cost-effective markets to include in their home search. Read More: From Debt to Dream Home: Navigating Student Loans on the Path to Homeownership
- Digitize your lending process – Gen Z and Millennial buyers expect a fast, digital-first lending experience. You can satisfy these expectations by allowing them to submit online applications, automating your document collection, and using integrated tools that let you centralize applicant data and avoid repetitive data requests. Read More: Enhancing the Customer Experience for Next Generation Homebuyers
How to Attract and Approach Underserved Communities
Underserved communities are another up-and-coming demographic in the mortgage market. Around 70% of new homeowners are projected to be of Hispanic heritage by 2040.
While NextGens often scrutinize lenders’ authenticity and online presence, underserved borrowers often need help closing ongoing education gaps. That’s because many of these homebuyers are the first person in their families to purchase a home.
You can educate these applicants and earn their trust by:
- Attending local events in their communities.
- Hosting educational seminars about credit and the home-buying process.
- Refreshing your awareness about all relevant housing assistance programs.
- Ensuring you have Spanish-language lending materials readily available.
- Cultivating a lending team that reflects your target market’s demographics.
Learn More: Fostering Social Impact & Business Growth: Empowering Underserved Communities
How Certified Credit’s Solutions Can Help You Serve These Borrower Segments
Certified Credit offers a wide range of tech solutions that can help you capitalize on these emerging opportunities. Here are just a few products and services that can help you convert the target markets discussed above:
- Credit Score Improvement Tools – From Gen Zs to borrowers from underserved communities, one thing most applicants can use is some credit score improvement. After all, applying with a high credit score can shave hundreds to thousands of dollars off the total cost of their loans.
At Certified Credit, our credit score improvement tools allow you to identify each applicant’s fastest path toward a higher credit score and monitor their progress. This personalized support can help differentiate you in a competitive market. - Self-Service Solutions – NextGen applicants like to be in control of their personal data. Fortunately, we have several self-service products that facilitate this experience, including:
- Cascade Prequal – Cascade Prequal allows your applicants to see if they prequalify with you in seconds. All you need to do is set your custom credit thresholds and feature this tool on your customer-facing website. From there, applicants can determine what types of loans, rates, and terms they can qualify for with you in a few clicks.
- Cascade VOE – Cascade VOE is our automated verification of income and employment solution. It allows you to leverage both instant-hit and consumer-permission data (CPD) vendors. With the latter, your applicants can share access to their income and employment data with you directly, giving them a greater sense of control over their data privacy.
Read More: 6 Benefits of Integrating Consumer Permission VOE into Your Cascade VOE Flow - Automated Credit Supplements – Like CPD, Automated Credit Supplements put control back in your applicants’ hands by allowing them to submit real-time tradeline updates via a secure link. In turn, you can remove the hassle of inconvenient credit supplement conference calls from your lending experience.
- Portfolio Review – While young borrowers and those from underserved communities are ramping up their mortgage participation, they also present a slightly higher default risk. Fortunately, Portfolio Review can alert you when an applicant’s credit activity shows trending late payments or increasing credit inquiries, enabling you to address these red flags before it’s too late.
These are just a few powerful solutions that can help you size today’s market opportunities. At Certified Credit, we also offer:
- Affordable credit reports
- Automated lead generation tools
- Automated undisclosed debt monitoring
- Fraud and risk support
- Flood zone determinations
- Property and valuation tools
- Underwriting compliance
- Settlement services
Ready to learn how our team can help you attract more business in 2025? Schedule a credit consultation with Certified Credit today!
Sources:
NPR. The Fed holds interest rates steady as Trump’s tariffs spark uncertainty.
https://www.npr.org/2025/05/07/nx-s1-5387499/federal-reserve-interest-rates-trump-tariffs-inflation
MBA. Mortgage Applications Increase in Latest MBA Weekly Survey.
Bloomberg. Are U.S. Interest Rates Going Up?
ICE Mortgage Technology. May 2025 Mortgage Monitor.
https://mortgagetech.ice.com/resources/data-reports/may-2025-mortgage-monitor
BusinessWire. ICE Mortgage Monitor: First-Time Homebuyers Comprise Record Share of Agency Purchase Lending in Q1 2025.
Arise. How Much Time Does Gen Z Spend Online?
https://wearearise.com/generation-z-spend-10-6-hours-a-day-engaging-with-online-content-every-day
Urban Institute. The Number of Hispanic Households Will Skyrocket by 2040. How Can the Housing Industry Support Their Needs?
