Banks experienced increased success in mortgage origination in Q1 2015. Chase reported that it originated 45% more mortgages in the first quarter of this year, compared to last year. Wells Fargo, the country’s largest mortgage originator, also reported a significant increase of 36% in mortgage originations. Mortgage rates, however, started to climb in May, which resulted in a sharp decrease in applications. In an effort to combat this downturn in advance of the industry’s prime buying season, marketers have been reaching out to potential homebuyers through new channels, using a variety of messages and tactics, along with creating new apps and partnerships, presumably in an effort to reach the new Millennial homebuyer.
In today’s digital age, mortgage marketers naturally turn to email for acquisition and cross sell efforts. According to Mintel ePerformance/eDataSource, an estimated 90 million emails that have been sent to new or existing customers. Those emails have been read by an estimated 20% of the recipients, with some read rates as high as 40%. The marketing messaging places an emphasis on education of new home buyers and judging by email read rates, potential home buyers seem receptive to these educational messages.
20% of US Millennials report saving for a down payment on a house is one of their biggest financial challenges
The focus on the new home buyer is critical in today’s marketplace, especially as Millennials represent the country’s first time home buyers, and they increasingly indicate a desire for personal attention and financial education. Millennials have watched home prices fall precipitously – something not seen by other generations – and are thus skittish about buying a new home. Nationally, the number of first-time homebuyers is down to 27% of all homebuyers, from about 40% before 2007, despite the incredibly low interest rates. Indeed, Millennials report that saving a down payment for a house is one of their biggest financial challenges, according to the Mintel report Millennials and Finance US 2015. Of the Millennials with a current mortgage, just over half have gotten their mortgages at a large bank, whereas, only 30% of younger Millennials, aged 18-34 have done so. This younger group is significantly more likely than those who are older (with the exception of those aged 55-64) to have a mortgage with a small community bank. This is due at least in part to the predisposition Millennials exhibit for developing a personal relationship with their financial institution.
Chase has been innovative in its marketing of mortgages to new home buyers, emphasizing personalization and education through the creation of its My NewHome app, online education and YouTube channel. The bank sent emails to existing customers about its Homebuyer Webinar, calling it “My New Home Webinar.” The email is geared toward first time homebuyers and promises expert guidance, real life examples and in-depth explanations, and a list of topics the recipient will understand after attending the webinar. The bank emailed an estimated 5 million customers about the webinar, which garnered a 19% read rate. To attend the webinar, viewers were required to register, giving Chase attendee contact information for follow-up after the event. To improve the read rates, Chase also personalized the emails by including the recipient’s name in the subject line. Using Mintel ePerformance/eDataSourcee, Comperemedia has tracked roughly 500,000 emails from Chase that used the subject line, “Lock in a low mortgage rate today, [name.]” While the volumes might not be large, the strategy of “marketing-to-one” resulted in an impressive read rate of 38%.
Wells Fargo is also marketing mortgages creatively, sending emails using the subject line, “Take your first step towards buying a new home.” The email offers a complimentary home buying guide and an interactive online course to educate new homebuyers about the process and how to prepare for the new home purchase. Other emails used the same subject line, but then included messaging about how Wells Fargo could help in each part of the buying process: planning, purchasing and owning. The two emails had an impressive 100% in box rate, and read rates of 30% and 38%, respectively.
Regardless of rising rates or the state of the real estate market, marketers need to continue to evaluate how they market mortgages, as consumers increasingly turn to digital tools. Those digital channels are a viable lead generation source, particularly when targeting the coveted Millennials. The challenge at this point is to find ways to reach new home buyers in unique and different ways, while creating a strong relationship with customers. The good news for banks is Millennials’ propensity to prefer doing business with their existing bank, and expanding the relationship. As younger Millennials, however, show a preference for community banks, the larger banks need to work hard to establish a strong relationship from the point of acquisition. Demonstrating a desire to help new customers establish financial goals and budgets, and providing tools and services to achieve those goals, are steps in the right direction. While the mortgage process is a high touch, personal process, there is a way to utilize the digital world. Short of creating mortgage-specific apps, banks could consider ways to add mortgage tools and education to their existing banking apps. Along with that, education efforts could be extended beyond current efforts to Google Hangouts and Tweet Chats.
Susan Wolfe is the VP of Financial Services at Mintel Comperemedia. She focuses on the banking and investment industries, bringing over 20 years of experience in marketing and research to her role.
