FEB 3, 2014
Compliance Matters

Growing Your Business as Rates Rise

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Mortgage rates are on the rise. The low interest rates of 2013 are long behind lenders and the average is hovering between 4.25% and up to 4.7%.

In 2014 experts believe that mortgage rates will continue to climb—possibly over 5%. Because of this prediction and the obvious climb in mortgage rates across the country, the number of new loan and even refinance loan applications has decreased dramatically. For mortgage businesses this is dire news, but it doesn’t have to be.

Mortgage businesses can continue to thrive even while interest rates are up and applications are down. To survive in a time where rates are on the rise, it is important that mortgage companies revamp how they attract and obtain new customers.

Here's what we know:

Previous Marketing Tactics Won’t Work in 2014

In the past few years, loan officers haven’t had to use much marketing to get business. Instead homebuyers came to them to take advantage of the historically low rates; making loan officers nothing more than order takers. Today homebuyers aren’t coming to loan officers. So now it is time for loan officers to learn how to go to potential leads and turn them into customers.

You Have to Sell the Benefits

Back in the day, there was one obvious benefit to a new loan: low interest rates. Today that is no longer the selling benefit. Instead, loan officers need to get creative and come up with new benefits that sell to the customer.

First-time homebuyers some selling benefits could be:

  • Comparing the cost of a mortgage to paying rent—show the monthly and annual savings of mortgage payments versus rental payments.
  • Showcasing the tax benefits, including writing off mortgage loan interest, real estate tax benefits, etc.
  • Showing how a mortgage loan can actually help a consumer’s credit score.

For refinance customers selling benefits could include:

  • Getting a lower interest rate than their current loan—some homeowners might have higher rates than what is offered today.
  • Building equity faster on a refinanced loan than their current loan.
  • Offering a new loan program—such as switching from 15 to 30 years to lower a payment or moving from an adjustable-rate to a fixed-rate mortgage.
  • Ability to pay off a mortgage loan faster.
  • Gaining access to equity in their home, which gives them cash to remodel, improve or even pay of credit cards.

You Have to Ask the Right Questions to Make the Sale

Sometimes the benefits aren’t enough to push a lead into a sale. It is up to the loan officer to ask the right list of questions to understand what the potential customer is looking for and what benefits will convince them to buy. First, a loan officer should ask the customer what they’re looking for in a loan, such as if they want to switch from adjustable to fixed rate. Perhaps the customer is looking to lower their monthly payments. Once the loan officer finds out what the customer needs, he can create a sales pitch that sells to those needs.

You Need to Utilize All Marketing Outlets

There are a lot of marketing channels out there to promote a mortgage business. Whether a business offers refinancing or new home loans, it is important they investigate these avenues.

These are some tried and true channels:

Direct Marketing

Direct marketing with emails is a great way to boost business awareness. A company can create a lead list and send out direct marketing advertisements right to lead inboxes. If possible, a mortgage business should customize their message based on the lead information. Such as listing the benefits of a refinance loan, because the lead information stated the customer was looking to refinance.

Digital Material

White papers, case studies and webinars hosted online can attract new customers to your mortgage business. Offer them something for free in these materials, such as how to buy a home, setting up a budget to qualify for a new home loan, etc. Today’s consumer craves quality information that they can get for free. Offering free information in exchange for submitting their email address could provide you with new potential leads to keep your business growing.

Buying Quality Leads

Mortgage businesses need a constant flow of quality leads to keep their marketing effective. Mortgage companies that pair with a lead provider could potentially have a daily list of leads to follow up on. But, having quality leads aren’t the only answer. The leads need to be solid and hot, and the mortgage business needs to follow up on them immediately before they become cold.

By changing tactics and creating a more customized approach to sales, mortgage businesses can continue to grow even with higher interest rates and lower applications. It is imperative that mortgage businesses think outside the box and tailor their campaigns around the benefits to the homebuyer and today’s interest rates. We want to hear from you. How is your mortgage business keeping up with the times?

Silas Ellman is co-founder at RGR Marketing/ReallyGreatRate Inc. He can be reached at silas@rgrmarketing.com.

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