Mortgage
The bright spot, economists suggest, will be slightly higher purchase volume —
In response to these market conditions, lenders say they are focusing on four major tactics to win business, serve borrowers, and support continued profitability, according to a November 2021 survey of nearly 70 mortgage and banking leaders who use Total Expert.
Sales and Marketing Productivity
With the shrinking pool of opportunity and a corresponding increase in competition, more than 90% of lenders polled said their organization was prioritizing “increasing productivity across sales and marketing” to achieve growth in 2022.
Lenders are looking closely at how marketing uses data and insights to identify and engage consumers in terms of both lead generation and retention. About 72% of lenders polled use a platform like Total Expert to connect industry-specific data sources via APIs, efficiently aggregate and segment data for a 360-degree view of contacts, and develop insights on prospects and customers to identify their next financial need.
They also are looking for holes in their funnels. A common lead-lost challenge focused on by respondents was borrowers who start a loan application but abandon it before completion.
“We need to better market to prospects who express interest by starting a loan application,” said one respondent from a South Carolina mortgage company. Often, they “don’t complete it, and we lose them.” We “are making sure we convert the purchase borrowers who begin an application with us,” said another marketing leader from a Georgia-based lender.
Borrower Retention
Segments identified through equity, location, rate, time since last loan, and even demographic offer lenders significant opportunity in 2022 to out-prowess peers at serving customer needs. For example, the median duration of homeownership in the United States is 13 years, according to the National Association of Realtors.2 The tenure for homeownership, however, varies by as much as 50%, depending on location. Ownership changes more frequently in metro areas than in other parts of the country. In certain cities, ownership duration is as low as six years.
“We are going to focus on new purchase opportunities,” said Brittney Stratton, marketing professional, AmeriFirst Financial, Inc. We expect “refinances [will] start to slow down and rates begin to rise.”
While rate refinance opportunities are fleeting, cash-out refinances rose to 54% of refinances as of August 2021. Federal Reserve data shows year over year increases — amounting to about $890 billion – in homeowners’ use of equity to finance additional real estate, home remodeling, refinancing of student loan or credit card debt, and even to purchase a vehicle.3 Recent Federal Reserve analysis has also found that even though millions of Americans refinanced last year, fewer Black and Latino homeowners did.
Lenders will need to “rely on data to make decisions,” said a Colorado mortgage marketing leader, to inform smart journeys that follow up with intuitive nurturing based on customers’ engagement.
Realtor Referrals
Realtors and builders have a lot of influence over which lender a mortgage borrower chooses. Realtors have long enjoyed the upper hand in a referral partnership because the consumer starts with them in the homebuying process. Even in the age of online shopping, data shows realtors are still the guides for the homebuying process. An average 88% of consumers across all age groups used a realtor to find their home. For younger demographics, like those ages 22 to 30, around 91% of consumers used a realtor to find the home they purchased.
“We’ll be focusing on creating event packages to help promote relationships with realtors,” said a marketing manager for a California-based lender. “We’re also working on increasing [realtor] adoption of Total Expert,” which provides complimentary marketing tools that loan officers can provide to realtors for free.
Dependence on realtors is also a pain point for loan originators. Lenders are getting around that dependence with technology to gain greater control over their pipeline. Of those participating in Total Expert’s survey, 88% said “nurturing customers on journeys to provide educational information” is a focus for their use of the platform. About 81% said they plan to use engagement journeys to loan officers in customer retention in the year ahead. In support of sales, “marketing is focused on increasing and supporting purchase business through more segmentation of audiences with specific messaging,” said a marketing leader at a Colorado-based lender.
Efficient Use of Loan Officer Time
Mortgage leaders expect profit margins to decline in the months ahead as lenders compete in a rising rate environment. As margins compress, pressure increases on loan officers.
"Despite elevated optimism toward the U.S. economy, lenders show a cautious outlook for their mortgage business," said Doug Duncan, Fannie Mae Senior Vice President and Chief Economist. “With the shift from refinance to purchase business…purchase transactions are harder to complete and have lower margins."
Lenders who want to support originator success in the year ahead are using technology — especially technology that creates customers for life and automates value-adding actions. “Sales staff will need to “stay in communication with prospects in a way that looks genuine and from the salesperson without them spending so much time manually creating it,” said a marketing leader at a Pennsylvania-based lender. “That is our challenge as marketers.”
Customer-for-life technology looks at data from past borrowers and anticipates borrowers' next mortgage needs. That insight turns into automated marketing actions on behalf of the loan officer. During markets with high equity, like the one expected in 2022, identifying equity-based borrowers is timely way lenders are supporting originators. In fact, lenders are finding niches in their data in every place they can. As a second leader at a Pennsylvania lender described it, 2022 will be the year of “replacing [refinances] with new business,” mortgage lenders will need to support loan officers “to find more clients and have more products to offer.”
