How lenders are using TikTok to reach Gen Z mortgage borrowers

Short, one-person videos on social media channels like TikTok are heavily associated with the generation of emerging homebuyers born after 1996, and a small but growing group of mortgage “influencers” are cooking up content in this format in order to reach them.

Leading creators with mortgage-related handles have cultivated thousands of followers and millions of likes on TikTok, a platform on which 60% of users are Gen Zers. While that’s a far cry from the size of the audiences top creators on the platform have, it’s a start.

In a broader context, social media personalities who are influencers have millions of followers and billions of likes. “I don't think anyone in the mortgage space has that,” Shashank Shekhar, CEO and founder of digital lending platform InstaMortgage, said in an interview.

So while these brief, fun and often irreverent videos have in part helped to define Gen Z, lender outreach to the nearly 68 million up-and-coming homebuyers in the age group to date has been limited.

To reach a broader audience in the short term, a strategy such as diversifying hiring to better mirror this age group’s demographics goes a lot further for home loans, said Shekhar. But in the long term, this form of social media could hold promise for those who figure out the right approach to it.

It can be tricky for several reasons, one of which is that this generation is notoriously skeptical of marketing, but this could be a good time to get in on the ground floor to see how far this method of reaching these emerging homebuyers could go.

“Generally speaking, we know that Gen Z does get influenced by social media,” Shekhar said. “But mortgages are a serious topic at the end of the day, and some of the videos on TikTok can almost be way too entertaining. So if I was a person thinking about buying a home and watching one, would I think I could trust you with my home purchase worth half of a million dollars?”

That’s one of the key questions mortgage professionals need to ask themselves and keep in mind when making this content, he said.

What works for loan officers
Scott Betley, the creator that at deadline had the highest number of followers and likes (nearly 720,000 and 7.5 million, respectively) in a mortgage search for users on TikTok, said he finds an “edutainment” approach strikes the right balance to that end.

With one video titled “Rent vs. Buy,” he highlights homeownership’s potential savings with text written in a dashed-off style over a series of short scenes seconds long in line with the typical TikTok format. As music plays with the overlaid text, Betley personifies a friend of one of the homebuyers he worked with considering the fact that his pal now pays $500 less per month than he did renting. In the final scene, Betley personifies the homeowner, nodding and counting his money. A brief side note posted alongside the video explains that it’s a true story involving a home in Maryland. In line with many TikTok videos, it’s a one-person act, which explains its popularity amid a pandemic that’s necessitated some social distancing.

“Some of it is just comedy, but I would say 60% to 70% of the content I put out has information tied to it that shines a light on something first-time homebuyers may not be aware of,” said Betley, who co-heads an influencer unit at NFM Lending and uses TikTok handle @thatmortgageguy.

The widespread frustration with soaring rents in particular has been a hot button recently, said Heidi Leonard, a branch manager at Embrace Home Loans. Leonard is part of a support group the company provides to help retail loan officers test social media’s potential. The group participated in challenges that included three social media channels, specifically TikTok, Instagram and Facebook. Prizes like a ring light, which could be used to film videos, could be offered to the winner of the challenges involved.

“One video that got the most views was me putting my thumbs down, and saying, Do you pay over $1,200 in rent per month?” Leonard said, noting that she finds this kind of messaging not only resonates with potential customers but referral partners in real estate as well.

Making home loans entertaining can be a challenge and it does take some work, said Nate Fain, a senior loan officer at Supreme Lending who posts videos under the handle @mortgages.are.boring.

“You have to address the elephant in the room, right?” Fain said, when asked his handle.

It’s a type of branding that seems to do relatively well with the context of TikTok videos that come up in a mortgage search. Fain had the third highest number of followers (246,000) and number of likes (1.9 million) on TikTok at deadline.

While that may not match up to the numbers generated by top TikTok influencers, for LOs with a local or regional market to address it can be a sufficient audience — if they can find ways to position their content to attract people from the areas they want to reach.

“I think around 92% of my following is from the United States. I’ve got some folks from Australia and England,” Fain said in an interview. “I’m licensed in six states, all in the Southeast. Basically if there are mosquitos there, I can lend there. That’s what I tell people.”

To ensure he reaches potential borrowers in those areas, Fain will post some content that addresses state-specific topics.

“I’ll put out a video like, ‘Top five reasons you should buy a house in Florida,’ ‘Top five landmarks in Alabama,’ or ‘Top five things to do in Kentucky,’ with the understanding that those videos are not going to blow up, but they will pull people from those places in,” he said.

The extent of Zoomer engagement
Because Zoomers are just starting to enter peak homebuying age, Fain said the number he’s reached has been limited, but he considers it a good time to be an early adopter of media that could be more influential in the future.

“I bought my first house at 23, so you are catering to at least the older members of the generation now. I've closed several Gen Z clients from Instagram, YouTube and TikTok,” Fain said.

Platforms like those will be particularly important when it comes to reaching these future buyers, said Craig Martin, managing director at J.D. Power.

“You need to be prepared to engage online. Social media has a much more meaningful role in influencing the customers’ choice among the younger generation,” he said in an email.

Fortunately, making the kind of no-frills, short videos that appeal to this generation generally isn’t expensive because lenders and loan officers shouldn’t expect to have a big payoff from it right away, said Fobby Naghmi, executive vice president at First Option Mortgage.

“TikTok has Gen Z in their audience, but those people are not really spending money yet. Facebook’s audience is all about spending money, but Gen Z kind of abandoned Facebook,” Naghmi said. “The Gen Zers are really captivated with TikTok so far, and they don't seem to be moving out of that as rapidly as they moved out of Facebook. And while people in Gen Z aren’t really buying yet, they’re on the verge.”

His company is starting to craft a short video aimed at appealing to this generation for placement on TikTok, but it might be experimenting with something that isn’t necessarily done in an influencer format.

“We’ll do the video solely on the phone with no green screens, no lighting. I want it to be as real as possible,” Naghmi said. “We found something as simple as that could get their attention.”

Videos centered on an influencer aren’t the only way to engage with Gen Z and the latter could be used to link to and other forms of content that might appeal to this age group.

“We were thinking of creating a game such as, “What kind of a homebuyer are you?” Shekhar said. “The categories would be horizontally ranked, so that no one would be better than another, like in personality-type testing, where a homebuyer could identify themselves as very picky or liking a particular feature houses have. That’s a social media play that works well on TikTok or Instagram, where you try to get people involved in ranking themselves.”

TikTok-style videos are helpful not only when it comes to engaging potential Zoomer customers but also bringing in loan officers from their peer group more likely to build rapport with them. Given the average LO age is in the mid-40s, it’s a group that could become sought after.

Jack Jarvis, a Gen Zer and LO at Westridge Financial who has the handle @mortgage_yack on TikTok (ranking No. 10 at deadline with 13,200 followers and 300,400 likes) thinks his social media experience was a plus when he applied for his current job based on a referral.

“I think I am the youngest person at my company and I displayed some sort of social media presence when they hired me, I think that did play into it,” he said.

Some other things creators should know
Comfort with social media and a strong following could be a plus for would-be job candidates in the mortgage industry, but applicants should be sure their content is in line with the corporate culture of the company they’re going to work for and shows they’d appeal to the most diverse generation emerging in the market, said Shekhar.

“I would probably hire an influencer, as long as that person's values on social media also align with my company's, showcasing things like how we are inclusive,” Shekhar said.

Compliance also needs to be kept in mind as loan officers must have numbers registered on the Nationwide Mortgage Licensing System, and some forms of housing finance information, notably the presentation rates, are regulated. Perhaps, because the LO’s role is regulated and centers primarily around objectively ensuring borrowers’ loans match their ability to repay, some mortgage creators like Fain prefer not to use the term influencer in describing their role on social media.

Because LOs’ role is limited to mortgages and Gen Z audience tends to be more interested in a topic like housing, their social media platforms can be a place to develop leads with referral partners as well as would-be borrowers.

“I've gotten relationships with several Realtors because of TikTok,” Jarvis said. “It’s really benefited me in both those ways.”

Another thing to be aware of is that with this form of social media, which is very visual, is that making these videos opens creators up to being randomly engaged by strangers who have watched them.

“I was once going down the escalator at the airport, when somebody was going up the escalator right next to me, and he shouted out 'Mortgage Yack,' which is my username on TikTok,” Jarvis said.

While feedback from strangers comes in many forms and can either be flattering or a little uncomfortable, it does prove the value of the content in making connections.

“It shows they watched the post, and that’s the objective,” Leonard said. “I get quite a bit of business from it. Sometimes just putting your face out there with the videos makes you top of mind with somebody that needs to refinance or get out of their rental and purchase a home.”