The trend: Many younger prospective homebuyers have been waiting out mortgage rates in hopes of saving money, contributing to plateaued demand for new homes. However, creative or atypical mortgage products could spur demand.

The products: National Mortgage News highlighted the following products and services:

• In-house financing: Paranova Property Buyers offers this to consumers who don't qualify for traditional mortgages, specializing in properties it owns.
• Crypto-backed mortgages: LendFriend Mortgage allows borrowers to use cryptocurrency assets to qualify for a home loan without having to sell those assets. We’ve recommended this to financial institutions (FIs) to meet demand among younger consumers. 
• Nonqualified mortgages: Pennymac has new such offerings for creditworthy borrowers with nontraditional incomes, such as self-employed professionals. It also has a debt service coverage ratio mortgage.
• Down-payment assistance: Click n' Close has a SmartBuy 5/1 ARM Down Payment Assistance combining an adjustable-rate mortgage with a repayable second lien. SWBC Mortgage offers the Homeownership Expansion Loan Program, providing a grant of up to 2% of the purchase price (up to $5,000). Federal Home Loan Bank of San Francisco offers grants of up to $10,000 to first-time, middle-income homebuyers.

Why these products matter: In this challenging economic environment, FIs have an opportunity to gain long-term loyalty by offering products that allow customers to realize their homeownership dreams. These products acknowledge the uniqueness of consumers’ individual financial situations.

FIs should move beyond a one-size-fits-all approach and develop a full suite of specialized loan products. FIs can build these products in-house or partner with fintechs and other lenders to get them to market faster.