Real estate data-giant Redfin and news media outlet Bloomberg have both reported how the U.S. housing market could be entering one of the broadest and strangest “cooling off” periods experienced in several years. Even though home inventory could get worse between now and autumn, it may not add pressure to increase sale prices.
What’s more interesting: Bidding wars in high-priced regions have nose-dived compared to this time last year, and they’ve slowed down in several middle-priced geographies too. However, they remain constant in lower-priced neighborhoods. Average mortgage rates have fallen 75 basis points over several months, but it hasn’t produced the expected uptick in sales.
Here are some tips for how to position your credit union to better capture repeat borrowers, newbies, people who barely know you, and the community at large:
Explore a partnership with local real-estate agents — but only if your credit union can supply what their clients truly need. From their perspective, competitive mortgage-rate offers from all sorts of physical and online lenders are nearly a dime a dozen for the average buyer, and 70 percent of mortgage business comes from an agent or family/friend’s referral. So… who do agents have a hard time getting pre-qualified? Mostly first-time and self-employed buyers — two different camps, although sometimes a borrower resides in both. How you experiment with this agent relationship to serve these buyers will be unique given your field of membership characteristics and personal credit union philosophy. For some, you could become the next-best — or best — referral in town.
Find your credit union’s “service sweet spot” for a home buyer at any stage. For repeat middle-age buyers and older couples, it’s the highly personal touches that matter. Life has been chaotic enough raising children, transferring jobs, managing finances, and staying on top of responsibilities. Hand-holding could be the best bang for their buck and speaks volumes when they consider referring you to a friend. For the younger crowd, being cost sensitive and almost overly transparent through the entire process will solidify that they chose the right lender. If the start-to-finish experience is more digital than not, you’ll get extra brownie points for making life easy. For any age, consider what they’ll say about your credit union to friends, family or online.
Trumpet your credit union’s unique member-owner model to both existing members and potentials, even in cases when “a mortgage is a mortgage.” Tout what makes your pre-qualification, origination and ongoing relationship different than other lenders, even if you end up selling the loan and retaining the servicing rights. Openly discuss how your credit union compares to the marketplace, perhaps both the pros and cons in certain circumstances, and don’t be afraid to admit if you haven’t gone completely digital. Oftentimes your trustworthy characteristics and other strengths will gain the respect of buyers. Parade the fact they don’t have to work with a third-party mortgage broker. Show why you offer what you offer, and the reasons you deliver it that way. Potential borrowers will gain a healthy respect if you are as transparent as possible during the process.
Educate, educate, educate your members and the community — and document and study your findings. Your credit union has an opportunity to learn from existing and would-be members. Classes on the mortgage and home buying process can go a long way in your community, especially if you catch folks at the right time. No sales tactics and no strings attached; just pure information and knowledge. If done consistently, the information and feedback your credit union receives from new buyer-scholars will be priceless from an awareness standpoint. If consumer education unfortunately leads to a rocky pre-qualification stage, don’t be afraid to refer your member to another credit union in select cases (only if it makes sense). The word-of-mouth sincerity and trust will pay off in the long-term. However, if you end up with a legitimate borrower, don’t waste an opportunity to fully study their work life, family and financial circumstances in relation to where the economy may be headed and where mortgage rates currently stand. Compliment your research by also keeping tabs on the types of jobs entering and exiting your community – high versus low or moderate skills and wages. Build your findings so you can eventually detect future worker-borrowers’ needs at the approximate moment they may consider your credit union.
Develop a realistic and sympathetic understanding of where younger buyers are coming from. More than likely, your average Millennial buyer, or upcoming future Gen Z borrower, is reinforcing their main income with a side job. For many, increasing home expenses are outpacing annual wages according to a combined survey recently published by Apartment Guide and Randstand US. About 42 percent of individuals within the 18 – 45-year-old range say they need to make $60,000 annually to live in their “desired” neighborhood, with between 33 – 39 percent, depending on whether they’re renting an apartment, house or room, admitting they have to hunker down with a roommate to shoulder the monthly cost. The bottom line is, this upcoming generation of 20-somethings, 30-somethings and young families may be encouraged by historically low mortgage rates, but that positive trend isn’t doing much to alleviate the burden of high housing costs relative to pay raises. Those who make it through any lender’s underwriting gauntlet will be in a privileged position compared to many of their peers as the housing market remains on its current course for the foreseeable future.
Mortgage lending is a great opportunity to win new members for your credit union. Focus on what you do best – people helping people – and realize that long term growth sits right behind helping members fulfill their dreams of home ownership.