As Mortgage Landscape Changes, So Do CUs' Marketing Efforts
There are major changes taking place in the housing market, and credit union mortgage-marketing efforts are evolving as a result.
Many areas, including Dayton and Columbus, Ohio, are seeing sales up year over year, but there could be hurdles moving ahead.
Tim Mislansky, who is SVP and chief lending officer for $3.4 billion Wright-Patt Credit Union and president of the myCUmortgage CUSO, both based in Beavercreek, Ohio, said while those markets are posting strong numbers, it's getting harder for homebuyers
"There are some really strong numbers," he said. "Housing inventory is adequate at the high and low ends, but in the middle-price part of the market there is not as much supply. Our average loan size is closer to the middle, so the market is a little bit more sparse for those houses."
Across the country — and in a much different marketplace — there are also changes afoot in the San Francisco Bay Area housing market, according to Vince Salinas, VP of home loans for $5.3 billion Patelco Credit Union, Pleasanton, Calif.
"We saw the apex hit in November-December. Hopefully we will see more homes coming into the market as this year goes forward," he said.
While it has been a sellers' market in recent years, Salinas estimated that things could level out as prices plateau.
"We need more sellers, as there currently are more buyers than sellers. Prices seem to be reaching the limit of what most people can afford. In the second half of last year you saw many people asking for top dollar, with the expectation that if they got top dollar they would sell, but if they didn't they would stay."
Mike Jennings, director of mortgage lending for $1.3 billion Advantis Credit Union, Clackamas, Ore., said there are two major factors that will continue to create "challenges" for lenders and borrowers alike: A lack of available inventory and appraisal completion times.
A balanced market — one where there are adequate available housing choices — is defined as one which has approximately six months of available rolling inventory, Jennings said. For most of 2016, the available inventory in Advantis CU's service area was measured in weeks, not months. In January, there were 68 days of available inventory in the Portland-Vancouver-Hillsboro, Ore.-Wash., market.
"This is an improvement over summer 2016, when the available inventory was just 14 days," Jennings said. "While 68 days is an improvement from 14, it represents a market which is still, very much, a sellers' market. I predict that prices will continue to rise as long as available inventories remain at these current low levels."
Most banks and CU have chosen, with very few exceptions, to employ the services of a third-party appraisal provider referred to as an appraisal management company, or AMC. Jennings said this was necessary in order to comply with the home valuation code of conduct, which states in part: "…no employee, director, officer, or agent of the lender…shall influence or attempt to influence the development, reporting, result, or review of an appraisal..."
While the use of an AMC has solved the issue of compliance for lenders, Jennings said it has created another issue in a lack of available qualified real estate appraisers. This dearth of qualified appraisers, coupled with the very high demand for properties in Advantis CU's service area, has translated into average completion times of 45 days to 60 days, or more.
"An appraisal taking up to 90 days is no longer considered an exception," Jennings lamented.
As mortgage markets are shifting, however, so too are marketing strategies. After all, consumers use smartphones to deposit checks, so will mortgage lenders soon handle home loan applications via text?
"I think Rocket Mortgage will come to the masses," predicted Patelco's Salinas, referencing the paperless mortgage application for mobile devices popularized by Quicken Loans. "There is an incredible amount of investment into all aspects of home loans. We will get to a point where someone can take a picture of a home for sale with their phone, and they will get the MLS listing information and get pre-approved for a home loan. We need to be innovative to stay in front of our members so we are there when they decide to buy. We are looking at ways to do that."
Mislansky said his credit union is doing more digital advertising, meaning targeted website advertising. "On Expedia recently I saw a Wright-Patt ad. More money is being spent on marketing. Home ownership is not like car ownership. You constantly have to be telling your members you do mortgages, so when they are ready to buy they come to you and don't get steered by their Realtor to the Realtor's favorite lender. Our loan officers are going out and having meaningful conversations with Realtors, builders and others who influence home loans.
Advantis Credit Union has not made any major changes to its marketing efforts related to real estate mortgages, Jennings said. "We will continue to utilize the marketing platforms that are able to reach the highest number of members and potential members without creating undue costs, which tend to drive up the price of products and services. Our goal is to provide the products and services traditionally associated with a much bigger bank but at a significantly reduced cost to our members and future members, while providing an exceptional member service experience."