The No. 1 tool in the marketing bag of tricks is the use of incentives. Discounts, teaser rates and the like have been used very effectively in the cable television vs. telephone company wars. Now, one of the nation's largest mortgage lenders, Navy Federal Credit Union, Vienna, Va., said its application volume is up over 50% since the start of August because of its incentives.
While record low mortgage rates do have something to do with this as well, Navy FCU is also attributing the app surge to three incentives and one loan program: a closing cost credit, rate match offer, a rate lock special and 100% financing.
According to National Mortgage News/Quarterly Data Report, Navy Federal was the 28th largest originator in the nation for the first quarter with $1.1 billion in mortgage loans funded. It is the nation's largest credit union with 3.7 million members and $46 billion in assets. Despite its name, Navy Federal membership is open to all Department of Defense military and civilian personnel.
Earlier this month, Navy announced it would pay up to $2,500 in closing costs for its mortgage borrowers; the offer covers both purchase and refinance transactions.
The promotion, according to a press release is "for a limited time only."
"The wonderful thing about this promotion is it can be used towards a member's closing costs or as credit for the fees that are paid outside of closing costs like the appraisal fee or a credit report," said Barbara Sheehan, assistant vice president, mortgage products.
The rate match incentive works like one you see at many traditional retailers—come in with a competitor's better offer and we'll match it. Navy FCU also allows applicants, once they lock in their rate, a one-time chance to lower it.
Jack Gaffney, executive vice president, lending, said in a press release, "we've added these other specials to help our members take advantage of this unique market, knowing that this is one of the most important investments they will ever make."
Apparently these incentives are helping to drive mortgage sales at the credit union.
Navy FCU said because of the app surge, it now predicts it will originate over $5 billion this year, which it said is on par with previous record years.
