How to Succeed in Our Current Rising Rate Environment

Surely your customers have seen the panic-inducing headlines:

So what exactly does it mean for today’s borrowers? To properly answer this question, let’s first take a quick refresher course in Federal Reserve policy. Away we go …

One of the Fed’s most important tasks is to promote moderate long-term interest rates. In response to the COVID-19 pandemic, the Fed decreased its federal funds rate twice, bringing it down to a near-zero target range. This year, amid surging inflation, the Fed has raised its benchmark rate four times to a range of 2.25%–2.50%.

Now of course, the Fed does not directly set mortgage interest rates. But its policy of incrementally raising its benchmark rate can indirectly affect mortgage rates. So when the Fed announces an increase, the headlines and anxiety focused on climbing rates starts all over again.

According to Mortgage News Daily, the average rate on a 30-year fixed-rate loan was 5.50% on August 3. Rates were at 6.28% in mid-June—the highest level since August 2008. The latest increases were in response to the July 27^th announcement that for the second time this year the Fed raised its benchmark interest rate by three-quarters of a percentage point. The Fed decision was aimed at fighting inflation, which has climbed at a pace not seen since 1982. When inflation rises, the Fed reacts by applying a more aggressive monetary policy, which invariably leads to higher mortgage rates.

Fortunately, there are strategies loan officers can take to overcome the challenges associated with today’s rising rate environment. Read on to discover how.

Deliver the right message—at the right time & place

Today’s borrowers are more informed, more connected, and more selective than ever before. And, most important of all, they are demanding—and what they are demanding is an integrated user experience that gives them the ability to move effortlessly between channels, depending on where they are in their home financing journey.

For example, early in the financing journey, the customer receives a targeted email detailing the many benefits of homeownership. Included in the email is a link to a landing page featuring tools and information designed specifically for first-time buyers. This could mean a calculator for determining monthly mortgage payments or interactive graphs showing the latest interest rates.

Whatever the case, the key is the experience is a seamless one. The customer jumps from an email to a landing page, and the look and feel of both is cohesive. And the result is the customer receives the right message at the right time and place.

Take advantage of video

Video has become one of the most impactful solutions for connecting with today’s borrowers. Video content allows you to appeal to the needs of your customers in a creative and authentic way.

According to Wyzowl’s annual State of Video Marketing Survey, 87% of respondents stated that video gives them a positive return on investment. Meanwhile, 92% said video is an important part of their marketing strategies.

Video can be especially beneficial to borrowers ready to navigate the mortgage process. Imagine the possibilities: an informative and engaging video that details each financing step—from preapproval to closing day. Or how about a friendly introductory video that includes background on available loan programs and testimonials from satisfied customers? With video content, the possibilities are simply endless.

Do not ignore direct mail

While mass communication has changed dramatically over the past 25 years, direct mail’s impact has proven to be remarkably enduring. Declarations that this form of marketing is obsolete could not be further from the truth. According to the Direct Marketing Association, direct mail response rates are 9% for a house list and 5% for a prospect list. For comparison, email has a 1% response rate for a house list and 1% for a prospect list.

As part of a multi-channel marketing plan, direct mail fits perfectly with digital strategies. For example, a direct mail piece matched with a follow-up email and targeted ads on social media creates consistent, meaningful customer engagement with a brand.

Embrace a marketing automation solution

One of the unfortunate consequences of this rising rate environment has been lenders adjusting to a smaller market by conducting mass layoffs. For remaining loan officers, productivity expectations are now higher.

An effective way to meet this increased work demand is to utilize a marketing automation solution. With the right marketing automation partner, you provide more robust journeys to your customers, leading to an increase in capture rates and higher satisfaction scores. The ideal marketing automation platform reduces customer acquisition and outsourcing costs and frees up time for loan officers to focus more on conversions and closing loans.

Pivot to home equity

Skyrocketing property prices have led to soaring home equity. According to Black Knight, U.S. mortgage holders saw their collective tappable equity—the amount available to borrow against while retaining at least a 20% equity stake in the homes—increase by $1.2 trillion the first quarter of 2022.

Interest rates for loans that tap into equity are still favorable compared to other financing options. This has created opportunities for loan officers to assist customers in accessing their home equity. Two of the most popular loan products for doing so are a cash-out refinance and a home equity line of credit. Sharing information on the differences between these unique products as well as their pros and cons can be helpful strategies for loan officers.

Ready to connect?

If you truly want to position your business for success in today’s rising rate environment, you may need to work with an industry-leading marketing partner. This is where Volly can help. We can assist you with all your needs—whether it’s direct mail, video, or marketing automation.