Mortgage Lenders Brace for Refi Boom, but Borrowers Are Leaving Money on TableAugust 6, 2019
Are you expecting many of your customers to come back for refinancing or many new customers to seek you out? That would make sense as interest rates are dropping. This August, the average 30-year fixed mortgage sunk down to 3.70%. That is the lowest the rate has been since November 2016, according to CNBC.
As you know, this low rate makes refinancing and home purchasing more favorable for buyers. In fact, one estimate indicates that 8.2 million people who hold 30-year mortgages could save at least 0.75% through refinancing.
But, you’ll find that many of your customers and potential customers aren’t going to take advantage. A full third of even those who apply for refinancing won’t shop around and discover your great rates. Why not?
Borrowers May Not Pursue the Best Rates
Doug Duncan, chief economist for Fannie Mae, argues that shopping for mortgages isn’t like shopping for your average household goods. While almost all consumers will comparison shop for their furniture, much fewer shop for their mortgages or their refinancing rates.
“Simply evaluating the ‘price’ of a mortgage involves looking at several interrelated components – including rates, fees, and points – and making an assumption about how long a borrower will stay in that mortgage,” says Duncan.
Homeowners may not feel like they have to time to look deeply into the teaser rates they see on advertisements. Making your advertisements more personalized and direct may help.
What Homeowners Value in Lenders
Duncan also stated that the Fannie Mae survey revealed what homeowners prefer to look for over the best refinancing rate. Homeowners cited staying with their current lender out of convenience. They also preferred lenders with strong customer service performance and responsiveness.
“Non-shoppers also reported much less concern with competitive terms when selecting a lender, citing other non-financial priorities, such as customer service/responsiveness and having a preexisting account with a lending institution. Individual households may have good reason for accepting that tradeoff,” added Duncan.
Strategies to Attract New Business
If you have strong customer service performance, it should be simple to maintain your existing customers. However, as you’re also unlikely to see much outside interest in your refinancing, it may be best to focus on those buying new homes, especially first-time home buyers. Low interest rates benefit buyers as well as refinancers.
Lakeside Title Streamlines Work for Lenders
Need to focus more on acquiring customers and following up with leads? Lakeside Title Company can help by taking the paperwork off your desk. We cater to the finance community, whether you’re a credit union or a bank. Streamlined refinance title and closing processes will help you take full advantage of the increased demand for refinancing and purchases.