Mortgage Burnout and New Ideas for Lenders
I’m sure you read the article in this week’s Wall Street Journal – Mortgage Burnout Looms for Lenders.
When mortgage lending volumes were buoyant during the pandemic, originators could offset competitive pressure on their margins. Especially when ever rates ticked down and the demand for refinancing grew. But volume in certain key segments is now getting harder to come by, even if rates remain low.
There is an effect in mortgages known as “mortgage burnout.” What happens is that many people have already take advantage of low rates to refinance. That reduces the pool of people who could still benefit from refinancing. It’s a cycle. We’re at the point where any additional drop in rates doesn’t always mean there will be people who will refinance.
Look at the Mortgage Bankers Association’s index of refinance loan applications. Volume is about a third lower than it was at the same time last year. That is partly driven by rates, which have jumped about 0.3 percentage points for 30-year fixed mortgages. We are also seeing a slowdown in some mortgage balances expected to be paid off.
We have been focusing on refinancing that could improve a borrower’s interest rates by a percentage point or more. The percentage of prospects was over 50% about a year ago. Now it’s closer to 40%. The good news is that this is still higher than the 30% we saw before the pandemic. However, we are seeing some shifts.
- There are fewer homes available to buy. Fewer first mortgages to originate
- Customers who can’t find a home to buy are shifting to fund renovations
- Some people are refinancing without property inspections.
- Cash-out refinancing is setting new records.
- Narrower margins for Originators
- There are more people in the mortgage industry than before, causing a lot of competition.
- Additional emphasis on prospecting for new business
Prospecting for New Mortgage Business – Mortgage Lead Generation in 2022
You don’t need to suffer from mortgage burnout! Successful lead generation for Mortgage brokers is a combination of the marketing list, the creative, the marketing channel and the offer.
Let’s take these one by one.
The List – Top lead generation marketing lists for mortgage brokers
- Cash-out refinance prospects
- Renovation loan prospects
- Refinance prospects
- ITA lists
- Reverse Mortgages
Make sure you work with a qualified list broker who can target these top performing groups.
Don’t get lazy. Personalize. If you’re leading with renovation loans, make sure your photo and copy reflect that. Talk about the awesome transformation a home renovation will make. If you’re offering refinances, remind the reader what they could be saving each month. Many refinance prospects can save a few hundred dollars each month.
Direct mail rocks for all kinds of mortgage, refinance and financial offerings. Direct mail is credible. That gives your mortgage brokerage a heads up over the competition. Direct mail is tangible. Your recipient has time to review, discuss with spouse. Direct mail is reliable. Your mail piece will get into your prospect’s hands.
You might want to follow your mailer up via email. This way you can send a message to those prospects you have email addresses for. Remember, email addresses will only be available for about a third of your list. Email can be a great reminder. It’s also very useful for branding and name recognition.
The offer counts in a competitive marketplace. You need to decide what you can afford to “give away” to make people “push” the proverbial button. No closing costs, no upfront fees, pre-completed paperwork. Hand-holding. Education.