Mortgage interest rates for 30-year fixed rate loans are hovering near historically low levels, suggesting strong mortgage and refinance opportunities ahead. Despite the rosy forecast, profitability will be tempered by the steady increase in origination costs squeezing margins. According to Ellie Mae, origination costs have risen from $3,500 in 2009 to $6,932 in 2014, increasing pressure on lenders and marketers to find more efficient ways to acquire and process loans.
One way to keep costs down and boost the firepower of your lending campaign is to invest more in digital marketing. Digital channels allow marketers to pinpoint their targets and increase shopper convenience while measuring concrete monetary returns. Here are a few observations on digital tactics financial institutions should consider when structuring their mortgage marketing strategy.
1. It’s not all about the rate
Mortgage shoppers are not rate driven… at least nowhere near as much as lenders tend to believe. According to the 2014 National Survey of Mortgage Borrowers, 77% of new home buyers applied for a mortgage with just one lender. Almost half didn’t even shop before completing an application! They are looking for information and guidance — someone to walk them through the home buying process.
2. Focus more attention to existing customers
Acquisition costs are lower, the trust factor is high and it’s a convenient call to make. So stimulate more calls by boosting your cross-marketing efforts. Use internal signage, email marketing and pop-up messages on your mobile banking apps to remind customers you are a source for mortgage advice and service. Don’t offer bargain-basement rates. These customers are willing to pay a little more for personal service.
3. Two audiences: new home buyers vs. refi borrowers
Unlike new home buyers, refinance customers are rate-sensitive and opportunistic. Because they don’t need a new home, they can afford to wait until rates drop low enough to make refinancing worth their while… then they’ll pounce. Loyalty is not a big factor to re-fi shoppers. They are not looking for much handholding; they have been through the mortgage process before. While they will likely get a quote from their current lender, they will shop the internet and go with the lowest rate. Lure them in with low rates or be content with those few willing to pay a little more for convenience or advice.
4. Leverage content marketing channels
Launch a content marketing campaign to attract and retain mortgage prospects. By adding home-buying and mortgage content to your website, you’ll boost readership and add new prospects. Content is well received. Almost three-quarters of retail customers prefer their introduction to brands or products be through articles rather than ads. (Roper Public Affairs 2011). Because first-time home buyers want mortgage information, the more useful the information placed on-site, the higher your rankings on internet searches — an important source of leads. Search engines can often deliver 40% or more of all total applications.
Blogs can be successful elements in a content marketing strategy. Whether on topics such as FICO scoring, preparing a house for sale or lending options, there’s a wealth of information of interest for appealing to shoppers. Internal loan originators or processors are often good sources for a monthly article. Video is another powerful option. Tape your loan officer answering five or six of the most commonly asked questions or have them explain the most frequent errors in completing a loan application. Place them on your website or on You Tube.
Once on-site, your goal is to keep shoppers returning and ultimately nudge them towards completing an application. Interesting, well-written information will help. Hiring a journalist is often a good idea. Avoid using syndicated or non-original material. Search engine algorithms deduct points and lower rankings when web material has been used elsewhere. Although web content requires time and money to build, it tends to be a continuing and cost-efficient source for leads.
5. Pay-per-click search engine marketing
Fresh, useful content will increase organic search rankings, however a faster (albeit more expensive way) to reach shoppers is by displaying your ad next to search results. Advertisers can bid for popular key phrases such as “lowest mortgage rates”, “no-fee mortgages” or “loan refinancing”. Depending on the number of advertisers bidding for the same key words, prices can range from a few cents per click to a high dollar amount. Once advertisers set a budget, costs are deducted as shoppers click on the ads. Click through rates can be measured and words optimized for maximum efficiency. Since search engines are often used to make rate comparisons or to gather information prior to purchase, these leads are highly valued.
6. Obsess over the shopper’s digital UX
Fill your mortgage website with engagement options. Web content should be useful, objective and curated for freshness regularly but, make sure they are also sprinkled with engagement opportunities. Engagement options are hooks that entice the shopper to click on a button or take an action. This may to ascertain current rates, subscribe to a rate watch, calculate a loan payment, call with an inquiry or complete a pre-application. Engagement points are valuable for two other reasons: they screen prospects that are worth cultivating and they inform you where the shopper stands on the path to an application. Are they examining mortgage options, reading rate watch alerts or in the middle of completing a pre-app? Knowing their location on the buying path, allows you to call or send a customized text offering help.
7. Tap the power of shopping sites for financial consumers
Two good digital advertising options are Bankrate and NerdWallet. Popular destinations for comparing checking, savings and mortgage products, they charge advertisers on the basis of visitor impressions. Lending Tree takes a somewhat different approach. They promise mortgage or refinance quotes from area lenders in minutes then turn around and sell those leads to clients. Zillow compares lenders, too, but their niche is giving consumers the estimated value of homes in the area. Plug in an address and you get the estimated value of your home and your future neighbors. Perhaps, more of a differentiator than a precise tool, Zillow attracts considerable traffic and is a good vehicle for display ads. Pay-per-click and mobile-only options are available, too.
8. Harness the power of big data
There’s lots of talk about big data in the banking industry, but not a lot of action. Most banks and credit unions are paralyzed by the possibilities big data presents. Where do they start? What resources do they need? Luckily, there are other companies who are not only well-versed in the strategies and mechanics of big data, they are also sitting out mountains of relevant information that you can leverage in your mortgage lending campaigns.
For instance, consider advertising on Facebook. Define your prospect area, the product you’re selling and the social media giant can feed your ad to those people with the highest propensity for buying. I’m not saying they read all your posts but Facebook has a huge database of personal information to help pinpoint top prospects. (You can read about how Navy FCU generated nearly $100 million in loans on Facebook in this article here on The Financial Brand.)
Another option is to buy an email list of potential buyers from a firm specializing in predictive modelling. Companies such as Accudata can help you create an ideal prospect list, analyze results and tweak both the offer and audience to maximize peak performance.
9. The remarkable impact of retargeting
Few tactics are more cost-efficient for snagging mortgage prospects than digital remarketing. The website shoppers who visit for rate information or content are excellent prospects. You can court them for the next few months after visiting your site by putting a cookie on their browser. When they peruse other websites, your mortgage ad will pop up with a link urging them to return and apply for a loan. Web retailers use remarketing extensively. If you have ever left items in a shopping cart and moved on to another site, you have probably received messages reminding you to return and check out. Sometimes they lure you back with a discount.
10. Using digital channels can sharpen your aim
Dig deeper and you’ll find plenty of other companies that target home-buyers. Most are easy to use, affordable and customizable to small geographic areas. Unlike the mass distribution of print and electronic media, digital avoids waste. By narrowcasting to a specific audience and carefully analyzing data, you can end up with a highly effective marketing strategy.
Digital mortgage marketing is growing in popularity. Customers are increasingly turning to Google to start their mortgage or refinance search. Lenders are digitizing the entire mortgage origination process to enhance efficiencies, manage compliance requirements, enjoy greater flexibility and keep costs under control. This gives marketers a new challenge: keeping up with empowered consumers and aggressive lenders to ensure their employers remain in the game.
Source: Kevin Tynan, Liberty Bank for Savings