As we usher in a new era of galvanized homebuyers who are well-researched before making a move, personalizing the shopping experience is imperative to breakthrough. Educate your outreach by keying into shopping behavior and you can empower your mortgage marketing in the new year.
Market outlook
Although the rate of home price growth is slowing, appreciation remains robust. Supply shortages continue to put upward pressure on prices while rising 30-year rates continue to put downward pressure on refinance volumes. The refinance boom of 2021 has given way to the purchase market of 2022.
The 30-year fixed-rate average clocked its 2021 high just before Thanksgiving, and the first few weeks of the new year registered the highest average rate since the early months of the COVID-19 pandemic, according to consumer rate watchers. Though mortgage rates have gone up slightly, they still hover at bargain lows for consumers who are considering homebuying. Besides, we all know that buying a home is subjective, with personal finances and life events often weighing in more heavily than market conditions.
A new generation of buyers
Not only is the market pendulum swinging from refinance to purchase, but we are also seeing a marked shift in who is buying. According to CoreLogic, millennials accounted for 51% of home-purchase mortgage applications in 2021. In fact, millennials have made up the largest share of home purchase mortgage applications since 2016.
There is also an emerging influx of high-net-worth younger consumers buying high-end homes. Millennials, the 72 million Americans now ages 26 to 41 years old, are the most educated generation in history, have higher earnings than other generations, and are set to inherit more than any prior generation, according to Brookings Institute research.
For lenders looking to win this next generation of customers, it’s more important than ever to understand the market and services this clientele needs. This younger generation of digital natives is entering one of the more expensive times of their lives with new higher-value homes and expanding families.
With the trend of younger Americans purchasing expensive homes set to continue, there is an untapped opportunity to serve this demographic as they make big life purchases and create valuable long-term customers.
At the other end of the spectrum, multigenerational and mixed family households have become more common, as Americans are increasingly “doubling up” to reduce housing costs. This trend is exacerbated perhaps by the aging of America and the growing desire to age in place. Regardless of the motivations behind the multigenerational trend, the traditional “nuclear family” is no longer the dominant household structure. And, sadly, the nation’s housing supply hasn’t kept up with demand.
Economic indicators tell us we may be able to expect more purchase activity. Tappable equity, the amount available to homeowners while retaining at least 20% equity in their homes, rose by 32% last year, surging to an all-time high of $9.4 trillion as cash-out refinance borrowers pulled the largest quarterly volume of equity in 14 years, according to Black Knight’s October 2021 Mortgage Monitor. With the tsunami of refinance activity calming, it is worth noting that substantial equity also empowers new home purchases.
Using data to inform your marketing
Consumer shopping behavior has permanently changed, consumer expectations have changed, and our industry needs to adapt to those changes to stay competitive. Harvard Business Review conducted an oft quoted Lead Response Management Study a decade ago and follow-up studies by other organizations have since confirmed a whopping 78% of customers buy from the first company to connect with them, responding to their query. Are you familiar with the cocktail party analogy?
You may have a chance at earning someone’s attention if they step in mid-conversation if the topic happens to be of interest to them. But your chances of earning their attention are much better if you talk directly to them about something they care about. This translates to the experiences consumers are having online with your brand. Behavioral data that informs lenders when their consumers are visiting mortgage-related websites can help “fill in the blanks” of information about clients and prospects to help you better understand their needs.
Meet qualified leads and current customers where they are. Today’s homebuyers are in-market for what you are offering, and they’re signaling (through comparison shopping and engagement) that now is the time to give them the information they need. Marketers that embrace external data like intent-based behavior, can meet consumers where they are to create well-tailored and well-timed online experiences that meet consumer’s high expectations and drive positive outcomes for the business.
Keeping preferences and permissions in mind, mortgage marketers can shift from only knowing and using static, personal information to responding to actions and signals like page views, form submissions, sign-ups, etc. Lenders can improve on recapture rates by using consumer predictive data to determine when a borrower is likely to be mortgage shopping, and marketing to them with the right content, at the right time.
This behavioral data can inform lenders when their consumers are visiting mortgage-related websites, giving them the ability to better time their engagements, increase customer retention and capitalize on new acquisition opportunities.
Direct mail response rates, for example, are typically two to three times higher for consumers flagged as in-market versus those who are not. And a recent Forrester study suggests companies utilizing consumer insight tools increase customer engagement and consistently close new business, resulting in as much as a 191% ROI over three years. Our job as mortgage professionals is to help consumers when and how they need us.
This is especially important in a seemingly perpetual pandemic market where behaviors of both consumers and those in the housing industry are changing. Partnering with fintech companies that provide behavioral data can add value by informing lenders when their consumers are visiting mortgage-related websites, and lenders can see which of their consumers are in-market, approximately 100 days prior to a credit trigger or an MLS trigger and up to 180 days before a closed loan. These shopping signals are the earliest signs available indicating a customer has started their mortgage shopping journey. The investments made into marketing automation systems provide lenders the capabilities to customize messaging and marketing campaigns to individual consumers. Lenders also have the opportunity to substantially improve customer experiences by leveraging behavioral insights.
Combining privacy, consumer preference and the Golden Rule of Data — treating consumer data like you would want your own data treated — are the most critical parts of providing an exceptional customer experience. Marketers can be empowered to provide interactions when consumers want them most, while protecting the consumers’ data.
Today’s marketers face greater competition than ever to grow their customer base and retain existing customers. The new market demands that we create value for customers by providing them with timely and relevant services and information based upon their needs at the exact moment they need it.
The correct use of behavioral data can enable marketers to create exceptional consumer experiences. Marketers willing to utilize the latest tools to understand consumers’ online shopping behavior, to look to actual intent rather than relying solely on modeled data and educated guesses based on static demographic segmentation, can improve consumer experiences and drive retention and ROI.
This was originally featured in the March Issue of HousingWire Magazine. To read the full issue, click here.
Natalie Mullen is the market leader of mortgage and banking at Jornaya.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this story:
Brena Nath at bnath@housingwire.com
