Since the start of the Great Recession of 2008, the housing and mortgage industries remain hot news topics. Market volatility, increasing interest rates, and tentative buyers have stressed the current mortgage market. As a mortgage broker, it’s important to keep tabs on these changes and trends to better hone your mortgage marketing system to reach the clients who will benefit from your services the most.
The following changes shaped today’s mortgage market and will undoubtedly continue to impact the marketplace for years to come.
Housing Industry Under Pressure
The noticeable slowdown in mortgage activity in recent years is due to the Federal Reserve’s ongoing rate hike process. The Fed is expected to hike interest rates until the end of 2019 leaving the market and your business under more pressure for five or six quarters.
Higher interest rates will deter prospective homeowners, so use your marketing system as a tool to educate clients on the numbers that directly affect their ability to qualify for a loan and close on a dream home. Attract new leads as you demonstrate your knowledge by:
- Making a list of topics your current clients ask during meetings and creating a digital video series on your website that answers the most common mortgage questions
- Creating a Q&A blog where you answer a new question each week
The outpouring of TV and print news related to loans, mortgages, and housing market shifts is leaving many homebuyers confused and stressed. Give people a hand during these trying times by creating a new platform to help clients understand the shifting waters.
This will position you as an important authority figure and your business as a trustworthy partner for clients to turn to with questions. Building trusted relationships is essential to generating new leads for your mortgage business during these complex times.
Wells Fargo’s plan to eliminate 638 full-time jobs reflects the downturn in the number of mortgage applications from the affordable housing crisis of 2018. Combined with the low loan default rates (as it now requires a smaller default servicing team), lean operations are the only way to survive these weak conditions.
Keep your processes clean and easy by offering a pre-approval program. A pre-approval program should:
- Offer a document checklist for applicants
- Be available online to upload all the necessary information
- Have a page to upload credit score and credit history
A great alternative is to offer a “how to” for clients who want to pull their credit score and credit history. This service will appeal to many of the mortgage customers who already find themselves overwhelmed by the application process and can help your business beat the current odds by increasing the number of applications.
High Approval Rates
NerdWallet reports that the average approval rate of mortgage applications is 88.2 percent. This data should be reflected in the content and enthusiasm of your mortgage marketing materials.
Help convey this to clients and potential buyers with a digital marketing campaign that shares the stories of successful clients in their new homes. Create personalized content with images and real-life stories that will encourage clients to follow through on their applications.
Show off how a client found a great home with your business behind them. This can increase leads and word of mouth referrals that will boost your yearly income.
The rise in mortgage rates will keep some homes off the market, fueling demand for home equity lines of credit. Don’t let the rising rates deter clients. Although the average interest rate changes over time, the lenders and mortgage programs clients qualify for can have a greater overall impact on the monthly rate they are required to pay.
Lower down payment options are also becoming more popular, especially for the new first-time buyers. If they don’t have enough cash in hand, clients will have more options to be able to cover increased monthly payments.
Change your marketing targets to better align with the mortgage buyers who need your help the most.
Establish yourself as an educational authority figure with white papers and blog posts to clarify the most confusing steps of acquiring a mortgage and buying a home. As an educator, you will be more approachable for the growing segment of new homebuyer clients, even in the face of higher rates.
First-time Millennial Homebuyers
Despite the ups and downs of the housing market, sixty-five percent of buyers are Millennials who are purchasing a home for the first time. Nearly all of those first-time buyers under 37 years old believe that owning a home is a good financial investment.
This positive big picture outlook on investing in a good financial future is the valuable position all mortgage brokers should use when advertising their businesses. Make sure your clients know you are there to help them invest in their future by offering additional services like free credit repair to help them meet their goals.
Credit repair training is free and borrowers will understand that as a trained credit specialist you can help them improve their credit score at no additional cost to your mortgage services. Not to mention, it will help them qualify for the loan they need to get the home of their dreams. The free service will appeal to any customer looking to improve their credit score and help your business by providing an additional service that will help close more loans.
Originally published 11/13/2018.