As we approach 2024, banks and credit unions are faced with a dynamic mortgage landscape that demands forward-thinking and innovative strategies. Fueled by surging interest rates, evolving consumer demands, and the digital transformation of banking, the next year presents both opportunities and challenges. We’ve spoken with hundreds of banks and credit unions this year and have heard first-hand the problems faced by executives in this market. This is a summary of what we’ve learned, and highlights what you should be considering when determining your mortgage product strategy for 2024.
Retention Over Acquisition: Cultivate Long-Term Relationships
In a market shaped by climbing interest rates, you're playing a long game. That means, shifting your focus from acquisition to retention. The recent Black Knight Mortgage Monitor Survey reveals a telling trend – refinance retention rates have languished around 20% over the past five years. In this higher interest rate environment, nurturing long-standing relationships is non-negotiable. Institutions that are focusing on consumer education, building trust and providing ongoing value are better positioned going into 2024. Personalized communication, educational resources, and tailored financial solutions can all play a vital role in ensuring that clients think of their institution first for their future home financing needs.
Utilizing Real Estate Agent Partnerships as a Growth Lever
Creating meaningful and mutually beneficial relationships with Real Estate Agents is cornerstone to a successful mortgage strategy. But amidst a saturated market, this can be especially challenging to accomplish and often requires a creative strategy itself. Equipping your team with thoughtful partnership offerings and strategies is a necessity. We’ve seen institutions equip their teams with specialized training opportunities, co-marketing efforts, or unique incentives to drive partnerships. By becoming a trusted ally to real estate professionals, you can easily expand your network and position your team as the preferred lender for prospective homebuyers.
Share of Wallet Strategy: Amplifying Client Awareness
The 2020 PwC study unearthed a gold nugget: enhancing the lifetime value of current customers yields returns of up to 70%. This dwarfs in comparison to the 10% return from new customer acquisition. Said differently, your existing clients represent a valuable, untapped resource. Many of your customers are likely unaware of the full spectrum of mortgage products and services you offer. Crafting an effective communication strategy is key to ensure they stay informed and educated so they always come back to you. By leveraging targeted and personalized marketing campaigns, paired with educational resources, your current customers are much more likely to come back to you when considering their home financing options.
Competing with National Brands: Leveraging Your Unique Strengths
Competing with national brands, armed with multi-million-dollar budgets, may seem like a daunting challenge. However, this also presents an opportunity. Local and regional institutions possess distinctive strengths that the national brands can’t compete with. And while it might be obvious to us, you shouldn’t assume that consumers have the same understanding of these differentiators. Over communicate your differentiators - emphasize personalized service, community engagement, and your deep understanding of local markets. Illustrate the tangible benefits of choosing a local lender through impactful storytelling, client success stories, and testimonials. By emphasizing what sets you apart, you can create a compelling narrative that resonates with clients and prospects alike.
Client Education: Empowering Informed Decision-Making
Today's consumers are submerged in a deluge of information - which is sometimes inaccurate. Empowering clients with the right information and knowledge is a powerful differentiator. We’ve seen institutions lean into education, creating content on things like, understanding interest rates, navigating the application process, and how to evaluate different loan options. By explaining and clarifying complex mortgage processes through webinars, workshops, or online resources, banks and credit unions not only fortify trust but also empower clients to make choices that dovetail with their financial aspirations. This commitment to client education strengthens relationships and fosters a sense of loyalty, ensuring that clients turn to your institution for their home financing needs time and again.
Utilizing Homebot's Magic Touch
Homebot takes the strategies we’ve discussed above to a new level by offering a home finance education platform aimed at keeping you deeply connected with your clients and future customers. Homebot provides personalized home finance education that keeps clients engaged and informed about their options, meanwhile providing your team with the intent data they need to engage meaningfully. By utilizing Homebot, banks and credit unions have the opportunity to further establish themselves as trusted advisors, enhancing client loyalty and increasing the likelihood that clients transact with you for their mortgage needs in the future.
As we look ahead to 2024, a strategic approach to mortgage production is essential for banks and credit unions seeking to thrive in a competitive market. By prioritizing retention, fostering relationships with Real Estate Agents, maximizing client awareness, and highlighting your unique strengths, you can position your institution for success in the evolving mortgage landscape. Embrace these strategies as a foundation for growth and resilience in the year ahead.