Inflation is everywhere. Mortgage rates have increased by more than 2.5 percentage points this year. There’s a shortage of housing inventory. The housing market is cooling off quickly. We’ve all seen the headlines, and it does paint quite a picture, but it isn’t time to liquidate your mortgage marketing and lead-gen strategies just yet. It is time to rethink them, though.
In this edition of our Compound Interest Newsletter, we will investigate where the market looks to be headed and how you can best re-task your mortgage marketing efforts to maximize revenues.
- What’s going on with the real estate market?
- 5 Ways Lenders Can Keep Leads Coming In With Mortgage Marketing
- Is it time for an inspection?
What’s going on with the real estate market?
After being white-hot for the last couple of years, the real estate market is starting to cool off. Both the reasons for this shift and the indicators of its existence are voluminous. Dramatically rising interest rates, sky-high home prices, the economic impact of rising inflation, and a lack of inventory leading to stressful bidding wars have all attributed to this result. Because of this, more prospective homebuyers are rethinking making a purchase right now, as evidenced by a recent Fannie Mae survey showing that a record 79% of consumers consider now a bad time to buy a home.
Other strong evidence of the real estate market slowdown is seen in the weekly reports on single-family residence mortgage applications from the Mortgage Bankers Association. As of mid-June 2022, the number of weekly mortgage applications was down 15% compared to the same week in 2021. It’s also of note that large national real estate firms have been announcing layoffs recently.
Today’s real estate slowdown versus the Great Recession
However, it’s important to note that there are many stark differences between the real estate slowdown today and what was brewing in 2007. Lenders don’t have nearly the same risk today as they did then. Many regulations that were put in place during the Great Recession seem to be doing what they intended. The average FICO credit score of mortgage borrowers is at an all-time high today, and the percentage of mortgages with adjustable rates is considerably lower today than it was at the start of the Great Recession. Most lenders are still in a good place to continue writing mortgage loans as long as they can continue to generate leads and close them. Making it all the more important to generate new mortgage business is the fact that the rise in interest rates has dried up the ReFi boom that took place during 2020/2021.
5 Ways Lenders Can Keep Leads Coming In With Mortgage Marketing
1. Generate Helpful Content That Champions Your MLOs
Publishing helpful content that your target audience will find valuable has been one of the most effective tactics for driving mortgage business for some time now. However, the recent disruption in the market creates a unique opportunity. While economic factors such as drastically rising interest rates have created trepidation from would-be buyers, it has also created confusion and uncertainty. Just because a particular buyer is now acting with less urgency because of the recent shifts doesn’t mean they won’t ultimately become a buyer. It does mean that they’re more likely to do additional research before buying. Buyers now feel less pressure to pounce quickly, which means they’re in less of a rush, and many of them are grappling with getting their arms around the recent shifts, which causes them to hit the pause button and seek out advice or research.
Provide valuable resources
So far in 2022, millennials have made up 43% of all home purchases. Many of these are first-time homebuyers who are new to the mortgage experience and very likely to seek online resources to help with their decision process. This is where lenders have a great opportunity, as many younger homebuyers won’t have an existing relationship with a lender and will be online searching for resources. If you’re able to serve up timely content that accounts for the recent market shifts, you can prove to be a valuable resource for these potential homebuyers. This can help you earn their consideration when they do decide to apply for a mortgage.
Use different content formats
Another thing to keep in mind is what format you use for your content. There’s not really a wrong answer to this, as blog posts, videos and even podcasts can all be effective methods for dissemination. However, including video as part of the mix does have some obvious advantages. One is that many younger homebuyers who are likely to seek online resources prefer consuming video content. Video is also very adaptable across platforms because you can post it to your website, YouTube and any social platforms that you leverage.
But perhaps the most important benefit to video is that it allows your mortgage loan officers to be on camera as they deliver advice. This gets not only their names but also their faces out into the online community. Plus, when shared on social, people they know are likely to see the content in their feeds and comment on your posts which helps drive more engagement while also propping up your loan officers as industry experts. It’s also nice for them to be propped up and supported right now as they navigate a challenging time in the industry.
2. Make Sure Your Audience Can Find You
This is interrelated to the first point about the likelihood of prospective millennial homebuyers searching online for resources. When they do this, you want to make sure you’re showing up in their search results. Having your website SEO buttoned up is the foundation for this. However, it’s also important to make sure that you aren’t just showing up in general results like “mortgage lenders in [insert city]” but also relevant searches related to what’s happening right now in the mortgage/real estate industry.
Search engines prioritize highly relevant content, so developing helpful resources with a regular cadence that discuss the current environment will help you gain exposure to prospective buyers who are seeking advice. Consulting with an SEO expert when developing your content distribution plan will help ensure that your content is highly findable online. The more that you leverage this tactic, the more compounding benefit you will see from it because it will not only get more eyeballs on the relevant content that you’re curating but will also lead to a general increase in organic traffic to your website over time.
3. Your (Online) Reputation Is Everything
With the tremendous impact of referral business on the mortgage industry, no loan officer needs to be told about the importance of their reputation. However, it’s important to also be mindful of your online reputation. While online reviews are likely to remain a secondary resource for most homebuyers (after referrals from friends and family), it’s becoming increasingly important as a greater percentage of the younger generations reach homebuyer status. This a multipronged process where lending institutions need to monitor their online reviews and respond to negative reviews, while also making a conscious effort to encourage homebuyers to leave online reviews.
It’s common for lenders to have a situation where the vast majority of their customers are satisfied with their experience, but then a disproportionate percentage of their online reviews come from the few that had a negative experience. Encouraging homebuyers to leave a review when leaving the closing table will help to get more of the positive stories told, which will improve your online reputation while also increasing organic traffic to your website. It’s also important to keep in mind that the homebuyers aren’t the only ones that can help you in this area. Positive reviews from buyer’s real estate agents or even closing attorneys can also provide highly credible online references for your services.
4. Let Your Advertising Tell Your Stories
While online reviews are an extremely powerful tool for generating leads, the one downside is that written reviews sometimes fail to show the full level of emotion from a customer who had a remarkable experience. Collecting video testimonials from homebuyers who had positive experiences with your institution can be a highly evocative marketing resource. It’s natural for first-time homebuyers to feel somewhat vulnerable when going through the purchase experience for the first time. In the event that you walk a homebuyer through the process in a manner that not only helps them close on the home but also gives them peace of mind about the process and makes it easier on them than expected, you’ve now delivered an experience that can make for a great story because it’s not only a success story but one that delivers on real human emotion.
Capturing this in the form of a high-quality video allows you to distribute the story not only on your website and social platforms, but it can also be leveraged through paid advertising channels such as broadcast, paid social, OTT (streaming TV) and online video. In today’s climate, lenders should aim to use every paid media dollar to deliver either valuable advice to the target audience or a powerful story that the audience can relate to. This will allow you to get the most bang for your buck when it comes to paid advertising.
5. Cross-Selling Must Be Personal
It’s both a blessing and a curse that financial institutions have more data than ever before at their disposal. It’s a blessing in that it enables you to make more informed efforts around cross-selling to existing customers/members, but the curse is that the people you’re cross-selling to are highly aware of this fact, which means they have diminishing tolerance for attempts that miss the mark. Cross-selling is a core discipline of most financial institutions, but it’s important to use it judiciously and with great precision.
Making sure that your targeting is tailored is one part of the equation but customizing the message is equally important. Where this now becomes very challenging is that institutions may need to reevaluate the indicators they have been using for products, such as mortgages, due to the recent shifts in the housing market and economy. Not doing so can lead to more swings and misses, which will eventually erode customer/member patience over time.
This doesn’t have to be all doom and gloom though. Lenders can get creative with substitution offerings for customers who may no longer be prime mortgage prospects due to the recent headwinds. For instance, a current homebuyer who currently has a low fixed-rate mortgage might be a worse candidate to move into a larger house now than they were before interest rates rose, but this dynamic could make them an excellent prospect for a HELOC that would allow them to add on to their existing residence which would make staying put more appealing to them.
Is it time for an inspection?
Not a home inspection—that isn’t really our wheelhouse, but if you want a second opinion on your financial services marketing efforts, give us a call at (502) 499-4209 or drop us a note online!