The current housing market is hard to describe, hard to predict and difficult to navigate for borrowers, renters and lenders alike.
Thank you for reading this post, don't forget to subscribe!The latest numbers are mixed. New data released at the end of March 2023 shows that US home prices – as measured by the seasonally adjusted case-schiller The Home Price Index – fell for the seventh month in a row in January. They are now 3% off their peak on a seasonally adjusted basis. But they’re still up 37% from three years ago. federal housing finance authority The data showed an increase in house prices by 0.2% from December to January and 5.3% during 2022.
For mortgage lenders, it all boils down to one set of questions: What will borrowers do in 2023? Will they stay in place, or take advantage of falling rates and shifting prices? Or will they see falling rates as an opportunity to refinance?
And, most important: What can you do for them – to meet their current needs and build long-lasting relationships?
Through our 2023 Borrower Insights Survey, we sought to answer these questions and provide insights our clients can use to win more business and stay ahead of their competition.
At the heart of the data: what consumers want and need
The survey results allowed us to examine the preferences and priorities of borrowers. We found that today’s borrowers want:
- resilience: When it comes to financing a mortgage, more than half (53%) cited flexible loan options among their most important considerations.
- Savings: Two-thirds (67%) said that saving money was one of their top three concerns for financing a mortgage; More than half cited low lender fees (56%).
- Education and Guidance: Renters keep thinking that owning a home is tougher than it is. Half (53%) believe that more than 10% down payment is necessary.
- High tech and high touch: Less than one in 10 borrowers want a fully digital experience (9%), although many welcome the convenience of digital processes and services.
- Different types of outreach based on different experiences: Seasoned borrowers (those who have made five or more mortgages in their lifetime) favor digital offerings. Those who bought when interest rates were low (one to two years ago) are likely to be cautious about selling their home.
- Trusted Referrals: Borrowers, especially the least experienced, relied on referrals to choose lenders, turning to their realtor, family or friends.
Steps You Can Take to Build Lasting Relationships
Now that you have this information, what should you do with it? Here are five key steps lenders should consider to be more successful in current and future market conditions:
- Invest in your online offering. Even the oldest and least tech-savvy borrowers want and expect the convenience of digital portals and processes to be a part of your service portfolio.
- Digitize your back office. Your technology investments shouldn’t be limited to customer-facing offerings. Smart back-office automation will free you and your people for the all-important work of maintaining relationships.
- invest in relationships with realtors, Borrowers rely on referrals from realtors, friends and family. Developing and maintaining relationships is essential – the quality of your referral network can be the margin of difference. Remember that “high tech, high touch” is what almost all borrowers expect and want.
- Know your borrower. Understanding borrower preferences by age and experience allows you to “meet them where they are.”
- Stay in Touch. It is worth noting the value of relationships over time. An ongoing relationship will generate repeat business and referrals years from now.
In the mortgage industry, we can always count on change. Five years ago, no one was expecting a global pandemic, inflation or interest rate hikes. The home lending marketplace will be different again in five years or so. By leveraging the right technology and maintaining a human touch throughout the borrower experience, you can be sure that in the foreseeable future, a steady and growing stream of business finds its way to your doorstep.
To access more valuable findings from the survey, download our free “What Borrowers Want” eBook, available now.
