The risk: Sixty-four percent of Gen Z and 65% of millennial homebuyers say their financial well-being will depend on their ability to refinance to a lower interest rate in the future, per Truework’s “The State of Homebuying in America” report. But if rates don’t significantly drop over the next few years, these customers’ mortgages could be at risk of defaulting.

Dive deeper: More Gen Zers and millennials (33%) reported "significant stress" when buying a home compared to baby boomers (22%), per Truwork. They also found the process "more difficult than expected" far more often.

And though they’re working hard to meet their financial goals, they lack confidence in their major financial decisions. When they make a major purchase like a house, most are doing so with significant anxiety

What banks should do next: Financial institutions (FIs) can step in to help young homeowners navigate their mortgages while they await rate changes. FIs can start by:

• Offering automated refinance alerts. Digital tools can monitor a customer's mortgage rate and automatically alert them when a refinancing opportunity arises, providing a clear path to take action. Banks with this feature can highlight it in marketing campaigns that target competitors’ customers who may hold mortgages.
• Enhancing digital transparency. Improve the mortgage process with a simplified application and clear, real-time dashboard. A more transparent and easy-to-follow process can ease younger consumers’ stress and lack of confidence.
• Providing a homeownership/homebuying educational hub. Develop a dedicated section on the website or app that helps customers estimate a mortgage amount they can comfortably afford, such as a calculator tool. Remember: These tools also help FIs improve their zero-click marketing strategies.