Predictions for the future of the housing market are positive. Last fall, the Mortgage Bankers Association predicted that mortgage originations will hover around $1.63 trillion in 2019 and increase to $1.68 trillion in 2020.
“The unemployment rate is at its lowest level in almost 50 years, resulting in faster wage growth and more confident homebuyers,” said Mike Fratantoni, MBA chief economist and senior vice president for research and industry technology. “While the Federal Reserve is expected to increase short-term rates further, 30-year mortgage rates should rise only modestly from here. We are seeing some deceleration in the rate of home price growth but believe this is a healthy pause for the market, as it will allow income growth to catch up to the recent run-up in home values.”
Even in the strengthening market, however, lenders are struggling. According to the MBA, mortgage profitability reached an all-time low in the fourth quarter of 2018. One problem is that traditional mortgage lenders are scrambling to catch up with all-digital ones. For example, although Rocket Mortgage is merely the digital arm of Quicken Loans, it closed on $7 billion in loans by itself in 2016. That’s enough to place it among the top 30 mortgage lenders in the entire country.
Another problem is continuously tightening mortgage compression. “While the macroeconomic and housing market backdrops are, and should remain, quite favorable, the mortgage industry continues to be challenged by the drop in origination volume, coupled with significant margin compression,” said Fratantoni.
Understandably, in the face of increasing margin compression, an influx of all-digital lenders, and an overall uncertain landscape, traditional lenders might be getting nervous. But lenders and loan officers can still win the old-fashioned way — through human connection. Today, it just takes a digital twist. These three steps can help lenders arm loan officers with digital strategies that build customer connections and compete with all-digital lenders:
1. Be strategic with marketing expenses. Many go-to marketing techniques for lenders are ineffective when it comes to cost and reach. For example, TV ads can cost around $30 for every 1,000 people the ad reaches. But loan officers can reach just as many people on their social media accounts for only $2.50.
Also, consider that 64% of buyers will choose their loan officer based on referrals or social media interactions. If your marketing strategy has yet to include social, it’s time to ditch old-school methods and turn your focus toward building a solid social strategy.
2. Be more human than brand. A social presence is a must for loan officers, and your institution needs to help them build an effective social strategy. A strategy that will bring in the most referrals focuses on the person over the institution. Arm your loan officers with high-quality, personal content — rather than product and service information — around your brand and have them share it on their personal accounts.
In one survey, 76% of consumers said they trust social media posts from “average people” much more than they trust posts from companies. When your loan officers share content, they build credibility for themselves and your institution. That’s why turning employees into advocates on social can increase their likelihood to exceed quota by 45%.
3. Be compliant with ease. When lenders talk about social strategies for loan officers, it’s often with caution: Compliance concerns can make developing a social strategy a daunting task. But it doesn’t have to be that way.
Though loan officers must meet the compliance demands of a regulated industry, there are tools that can help ensure consistency across all social media posts. Gremlin Social can provide approval processes and archiving tools that will streamline compliance and lessen concerns.
Seeing digital lenders prosper while traditional ones flounder can be disheartening, but there’s plenty of reason to be optimistic. Many lenders already have the tools, teams, and experience to help loan officers exceed customers’ expectations — they just need to put it all to use in a digital way. By building a humanizing, compliant social strategy for loan officers, lenders can bring in more referrals and keep up with the all-digital competition.
Check out the Modern Homebuyer's Journey infographic here!