What to Do When Mortgage Production Falls: Six Strategies for Growth

IF YOU’RE WONDERING WHERE THE MORTGAGE GROWTH OPPORTUNITIES ARE HIDING, YOU AREN’T ALONE. 

Mortgage originations were down nearly 20% in the first quarter of 2018. This followed a decline in 4th quarter of 2017 and represented the lowest quarterly production level since the end of 2014, according to Inside Mortgage Finance.

We can talk about the “whys,” but none of the reasons are likely news to you: higher interest rates, first-time home buyers scared away by higher home prices, and the dread of participating in what can be a cutthroat process in a sellers’ market—as just-listed homes receive multiple cash offers on the first day and end up selling well above listing price. Add in the fact that annual mobility rates within the U.S. seem to be stuck at a postwar low rate of 11%, and the listless market is no surprise (Source: U.S. Census).

Even before this downturn, you may have found yourself facing a more competitive selling environment.  Mortgage providers have gotten more aggressive in their acquisition programs in recent years, leaving you working against more competitors, more attention, and that ever-present issue of enhanced technology.  How can you compete?

Many of our clients are successfully doing so, despite the factors noted, with the implementation of strategic and tailored solutions that reflect the conditions in their areas and the people in their market.

HERE ARE SIX SOLID STRATEGIES TO CONSIDER

  1.  If home prices are rising in your area, look for prospects who might refinance to eliminate their PMI, lower their payment, or shorten their term. The financial benefit you can provide to these customers often outweighs a higher interest rate.
  2.  Increasing home equity also gives you the opportunity to find customers who would like to access extra cash. (A recent HELOC expansion program we implemented delivered an ROI of more than 3.0, and a separate program to spur use of inactive HELOCs resulted in a phenomenal ROI of 99.0.)
  3. Even if the interest rates aren’t reflective of a great refi market, you likely have pre-retirement customers and prospects who are realizing that it’s time to get more aggressive about paying down their mortgage. Look for ways to help them lower their rate and shorten their term.
  4. Watch for short-term opportunities—and have a campaign or program waiting on the shelf. When mortgage rates hit 5%, ARM products typically become immensely popular.  If you plan now, you can be first to sense the altered demand and quickly have your program in the market. Alternatively, in some markets, Jumbos afford opportunity.
  5. Increase outreach to centers of influence–particularly realtors and builders. Strong relationships with these individuals can boost pipelines of profitable new business.
  6. Commit to your course and promote, promote, promote!  Make sure your name is out there and your value is communicated. (Recently, for example, a client launched a campaign stressing the value of their experience and expertise to consumers struggling to understand and react to the changing market—a welcome opportunity to promote value beyond just rate.) Have access to a library of content in your CRM system? Encourage your team to launch automated touchpoint campaigns that target prospects and previous customers in meaningful ways–with messages that are relevant to their particular circumstances. Leverage digital campaigns, with lower acquisition costs. Do everything you can to ensure you will be top of mind when the customer is ready.

It’s helpful to note that success can often be achieved through straightforward programs that don’t require elaborate efforts to implement. We have seen strong results and positive ROIs (a 6.0 on our most recent effort) when we work with clients and target customers and prospects—even with simple mortgage propensity programs. We’re able to use customer data, P$ycle segmentation data, and other relevant information to target effectively. 

A look at three recent direct mail campaigns executed by Galapagos Marketing.

Not to be discounted is the fact that these programs can also improve the lives of customers by helping them get what they needed: through better rates or terms, access to cash, and increased convenience.  Growing your business and improving your customers’ lives is, of course, a winning combination.

Let us know the greatest challenges you are facing in the mortgage business. Email or call us anytime.