Primary marketSurvey Reveals Negotiating Power For Mortgage Consumers
If mortgage interest rates remain low and refinancing lines continue to dwindle, mortgage lenders efforts to retain remaining customers and woo back some they"ve lost could give consumers a negotiating edge.
Second home buyers may not have to spend more than they did for their first home, self-employed entrepreneurs may lose their stigma and immigrants could get red carpet treatment -- all from lenders looking to pad their loan portfolios, according to the findings in "Mortgage Marketing Department Research", a survey of 15 mortgage lenders, including eight of the nation"s top 20 originators.
The survey was the first such survey commissioned by Campbell Lewis Communications, a new public relations, advertising and marketing firm focusing on mortgage banking and financing services.
"If you want to refinance or if you are buying another home, a second home, then you should really go to your current lender," said John Lewis, a partner in the Washington, D.C.- and New York City-based upstart.
"It"s at least worth a phone call. Customer loyalty and retention are two big issues for lenders and they are trying to address this, some more successfully than others," Lewis added.
Campbell Lewis commissioned pollster R.S. Carmichael & Co. of White Plains, NY to ask marketing professionals from lending companies about the mortgage industry"s future and upcoming marketing issues.
Mortgage marketing professionals said:
The refinancing boom is about to end and refinancing volume will drop this year by 40 to 50 percent compared to last year. Refinances accounted for 57 percent of the $2.3 trillion in mortgage originations last year, according to the Mortgage Bankers Association of America (MBAA).
Nevertheless, mortgage marketers are optimistic about 2002. They say purchase mortgage volume will compensate for the decline in refinancing volume, interest rates will remain attractive, the second home market will accelerate and consumer confidence will increase. Indeed, economists say both the National Association of Realtors and the National Association of Home Buildersare justified about being bullish on resale and new home sales. Housing, many experts agree, kept the economy out of a deeper recession and is leading the way out of financial doldrums.
The shift from refinancing to purchase originations will challenge mortgage marketing departments to identify and attract home buyers, which isn"t as easy as accommodating the recent refinance demand.
To address the shift, lenders will focus more on customer retention, marketing to emerging ethnic markets (The average U.S. home ownership rate for native-born households is 67 percent, compared to only 47 percent for immigrant households, according to MBAA.), cross selling home equity products, retaining servicing, improved communications and better deals on rates and fees. Price transparency, created by the Internet, will challenge lenders to prove that they truly have the lowest rates, fees, and costs, and that their guarantees have value.
Lewis was surprised, however, that with all the talk of customer retention there is relatively little evidence of new and specific product development as a means to that end.
"It could be, because of the refi volume over the last five years, they have not had time to pay attention to new product development," said Lewis.
Other financial commodities -- credit cards, mutual funds, insurance -- are often heavily marketed with known, easily recognized brand names. That"s because new product development, branding and related marketing are key strategies for both consumer acquisition and retention strategies.
"I think it"s significant that an industry dealing largely with a commodity-type product and when lenders are trying to differentiate themselves, that there are many lenders without real brands or known household names. I would think there would be more emphasis on product development to distinguish themselves," said Lewis whose company offers related marketing services.
The survey said the findings point to an opportunity for companies who want to dig into niches including self-employed buyers, first-time buyers and ethnic borrowers.
"We know refinancing is going to go away and not everybody can replace what they are going to lose from the refix drop off. Lenders are really going to be scrambling and they may be offering better deals and better service and may become much more aggressive in the market," said Lewis.
"If you are a home buyer there should be some deals out there. Your Realtor and your builder should be aware of them. You should really try to negotiate with them to see if they are willing to back up the rhetoric about wanting to retain customers," he added.