Lead Generation During a Rising Rate Market

Is this happening to you or your LOs right now?

Singing the Rising Rate Blues?

With refi mortgage applications down 52% from last year and rates inching over 4%, many lenders have begun the rising rate shuffle.

We've all seen this dance before. It starts by changing things slightly. When rates are high, many lenders will change their loan guidelines and offer new products in order to attract more customers. Or lowering mortgage insurance.

Then it expands into cutting expenses like marketing programs and payroll. And if these changes don’t work, your dance starts to look more like drowning.

It doesn’t have to be that way.

Lenders who survive and thrive in rising-rate markets target the right borrower at the right time.

Refi Opportunities

Per Black Knight, there are just under six million refi opportunities available. And if all consumers were to refinance, the total monthly savings would equal almost $1.6 billion. According to Rob Chrisman, that's about $275/month per borrower. But, Chrisman warns that the clock is ticking, even if there are deals to be made.

You need a strategy to capture these deals.

Will Direct Mail Work?

Digital advertising, social media, and partnerships are fundamental to lead generation. But digital channels are saturated with marketers jockeying for position. That's why Google and Facebook don't even advertise on their own ad networks. Instead, they rely on direct mail to reach their audience.

Consider this: consumers who received direct mail offers successfully recalled the brand over 75% of the time. By contrast, those receiving digital-only offers had just a 43% brand recall.

A reported 67% of financial service institutions use direct mail marketing. But how does it perform?

• 42% of direct mail recipients read the mail they get (Gallup)
• Direct mail recipients spend 28% more money than people who don’t get that same piece of direct mail (USPS)
• Direct mail offers a 29% return on investment (Marketing Charts)

Purchasing Lead Gen Data

The key to a successful direct mail campaign is finding the right audience. A generic list will only get you so far.

Many companies will sell you a list of property owners filtered by parameters like zip code, loan amount, interest rate, or LTV. However, a rising rate market is not the time to play direct mail roulette. Wasting time and money on individuals who will never transact eats into your marketing budget.

Before you buy lead generation data, make sure you ask the provider these essential questions:

1. How are you ranking and giving me the data?
2. Are you selling this same data to my competitors?
3. Have you sold this same data to another branch within my organization?
4. How are you monitoring the market?
5. How fresh or current is your database?

Back to talking with Mrs. Jones

Let’s bring this full circle.

You’ve now paid for a great list of leads. You sent a fantastic mailer to Mrs. Jones. She calls into your 800-number, and your loan officer begins the discussion with the worst question anyone can ask in a rising rate market: What’s your current interest rate?

A highly-targeted direct mail campaign will elicit a strong response rate. Still, if your staff is not trained to discuss how this borrower will benefit from refinancing, you may not get great results.

Properly trained loan officers will look at the facts, do the math, and explain the bigger picture.

These lenders will succeed with those six million refi candidates in a rising rate market. The top lenders will show borrowers how they will save, long term, from a refinance.

Lenders need to find more effective ways to reach their target audience. Direct mail is a great way to do this, but it's important to use high-quality consumer data to ensure your message reaches the right people.