Consumer Sentiment: Use it to Captivate and Motivate

Consumer Sentiment: Use it to Captivate and Motivate

A new survey showing consumer preferences, motivation and confusion provides opportunity and fodder for mortgage companies, loan officers and Realtors to start discussions that turn into transactions. American Financing polled 1,000 Americans spanning the entire country, various income levels, ages and gender. The survey uncovered these insights:   

  • Preferred down payment amounts and loan lengths  
  • Specific financial incentives to buy versus rent 
  • Confusion regarding mortgage interest rates and debt impact 

Each revelation in the Mortgages in America Survey can open a door for MLOs and Realtors to educate consumers, build trust and establish themselves as valuable advisors in the realm of real estate and financing. Consistent, relevant outreach to databases of leads, past clients and sphere of influence is a must in the industry, but more specialized communication can significantly amplify engagement and desired results. Potential variations in results can easily be illustrated in comparisons between generic messages, and marketing that addresses specific consumer sentiment and offers insights and options the public may not realize they have.   

 

Marketing Smaller Down Payments 

The first preference noted in American Financing's poll was for smaller down payments, where 53% of respondents - including a majority of Millennials, Generation Xers, and Baby Boomers - said they prefer a 10% down payment over 15%, 20% or 30%. The first challenge with email marketing is getting your targets to open it; so consider the potential impact of emails on this topic with each of the following subject lines:  

Subject Line: It's possible to get a mortgage for less than 10% down… 

Subject Line:  Why spend more than you need to?  

The subject of low down payments can fill entire campaigns, so instead of simply publicizing their availability, address the deeper questions and concerns of today's consumers who know how to use search engines and mortgage calculators. For example, low down payment loans likely require mortgage insurance, so craft generic comparisons between potential equity gains of renters (zero) and home buyers who purchase a median-priced property in your area with 0-3-5% financing over 1, 3, 5 and 10 years using modest year-over-year appreciation rates.  

The ability to see the cost of mortgage insurance offset by equity accrual and the comparison to the guaranteed disappearance of dollars paid toward rent is compelling and far more likely to generate a face-to-face meeting than obvious sales pitches.    

 

Variations in Loan Term Preferences 

The next preference showed an age gap in term preferences with Baby Boomers leaning toward 15-year mortgages and Millennials and Gen Xers preferring 30-year loans. However, both of the following headlines regarding loan lengths can be effective for all ages: 

Subject Line: What's better - a 15 or 30-year mortgage? 

Subject Line: Safe-keeping or blocked access?  

Loan terms offer tremendous opportunity for MLOs to showcase their expertise as they help potential borrowers determine what's best for their personal situations, and involve a financial advisor partner to analyze using the difference in payment between a 15- and 30-year loan payment in ways that can diversify a consumer's financial portfolio.  

Since most people choose 15-year loans with the goal of paying off their homes as soon as possible, marketing on this topic should also point out the pros and cons of tying up large amounts of equity at current interest rate levels and offer more specific information from a loan officer and other partners.

  

A Question of Renting vs. Buying 

The next area the Mortgages in America Survey deals with is consumer motivation. On the rent-versus-own question, 40% of respondents said it would take a monthly increase of less than $100 to motivate them to take steps to buy a home, while another 37% said it would take $101-300 to get them to consider a move. Which of the following resembles marketing you've sent or received? 

Subject Line: Should you rent - or buy a home?  

Subject Line: How much is too much?  

Once again, the first example is representative of the majority of email marketing used by MLOs and Realtors. It is on point, but it isn't very interesting. Tapping into consumer pain - in this case, rising rents and dollars that can never be recovered - is more captivating than the answer to a question posed by someone with an obvious vested interest in a particular outcome.   

 

Explaining Interest Rates to Consumers 

Interest rates offer yet another opportunity for MLOs and their Realtor partners to educate the public. While 56% of survey respondents who plan to buy a home in the next five years pay attention to interest rates, 23% don't understand how they work and that number increases to 26% in the Millennial segment. You're likely to lose (or never intrigue) most prospects with a tutorial on the bond market and how it drives mortgage rates; however, explaining how higher interest can hamper their plans is highly effective.    

Subject Line:  1% could cost you a spare room 

Subject Line:  How much does waiting cost?  

The public has seen and heard the line, "Interest rates are at historic lows!" for so long that it’s virtually meaningless. But understanding how much quicker rising interest rates eat into consumer purchasing power through real examples gets people's attention. A decrease in the amount someone can borrow of even ten thousand dollars can require a significant adjustment in square footage and other features buyers want in a home. Scenarios based on your local median-priced homes and realistic potential rate increases can be very persuasive.   

Statistics, surveys and data are released so often that it's easy for busy professionals to overlook great nuggets of information that can beef up their pipelines and production. Keep an eye on industry news, find the pain and create messages that offer solutions for consumer concerns. Opportunities abound in almost every market condition, so remember - it's not what's going on, but rather how you talk about it and whether or not you get the message out that matters.   

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