In 2020, the dramatic drop in mortgage interest rates coupled with economic uncertainty triggered a surge in the mortgage market. The volume of refinancing loans reached records, and the refinancing initiations were closed at a record pace $ 2.8 trillion, according to data from Black Knight. Responding to significant market growth and demand, many mortgage lenders, brokers and banks rushed to develop their teams – hiring in all areas, from processing and underwriting to inception and closing. So far, for the majority of 2021, refinancing loans have represented a 60% share of all mortgage volume, according to the Mortgage Bankers Association (MBA). While the refinance borrower pool may be smaller than in 2020, mortgage refinance marketing should still be a priority for lenders and mortgage marketers.
With many borrowers having refinanced recently, but mortgage rates still historically very low, lenders and mortgage marketers should strive to understand consumer motivations and trends around refinancing lending. Take advantage of consumer survey data, Digital media solutions (DMS) sheds light on the latest consumer trends and key factors influencing homeowners seeking refinance loans as of April 2021. The data presented can help mortgage brands and advertisers more effectively target mortgage loans. refinancing audiences and expanding their borrower base.
Homeowners embrace refinancing over and over again, with repeated refis on the rise
While 2020 has been a hot year for refinancing, consumer trends and data for 2021 indicate that many homeowners are enjoying the benefits of refinancing over and over. Data from the DMS Consumer Survey collected responses from more than 250 homeowners, ages 18 and older, across the United States who had refinanced their mortgage at least once before or are considering future refinancing. Based on responses to the DMS survey, When asked “How long do you plan to refinance,” just over 10% of homeowners who refinanced in 2020 plan to refinance within the next three months or sooner. Young homeowners, aged 18 to 34, have shown the greatest intention to refinance multiple times.
The repeat refinancing trend was identified in 2020, amid week-to-week interest rate cuts, with rates plunging to historically low levels. According to data from Freddie mac, last year, repeat refinancing was on the rise 7.8% compared to 2019. Specifically, metropolitan areas with high housing value, such as Los Angeles, San Francisco, San Diego, Phoenix, Denver, Seattle and Washington DC, saw the largest increases in repeat refinancing.
The market remains privileged for repeated refinancing with homeowners
Homeowners may be more inclined to refinance multiple times due to the added convenience and efficiency offered by lenders and financial institutions that have made the switch to an almost fully digital mortgage process. At the start of the pandemic in the second quarter of 2020, many lenders, financial institutions and banks moved their workforce to be almost completely removed. This shift to working from home has forced lenders to use more digital tools and technologies to streamline the lending process while working with borrowers remotely. As a result, an experience that once seemed long and complicated for consumers has evolved to reduce friction and improve the borrower experience, which has positively impacted customer satisfaction.
Getting a lower loan interest rate remains the main motivator for homeowners
Even with some rate fluctuations, in 2021, interest rates for the three main types of mortgages reflect lows not seen since. 2016 and 2013. In fact, borrowers haven’t seen interest rates fall below 4% at any time between January 2018 and May 2019. Not surprisingly, according to data from the recent DMS Consumer Survey, âSecuring a lower interest rateâ is one of the main motivators to seek refinancing this year.
Young owner segments want to cut spending and increase savings
Gen Z and Millennial homeowners are also motivated by the possibility of obtaining lower interest rates through refinancing, with 56.9% choosing ‘securing a lower interest rate‘ as a key motivator , according to data from the DMS survey. Gen Z and Millennial homeowners also noted other savings motivations as additional factors influencing their refinancing decisions. These savings-related reasons include reducing monthly mortgage payments, reducing overall payments, and removing PMI. While the generations who witnessed the impacts of student debt, underemployment and the Great Recession, Gen Z and Gen Z consumers valuing financial security and stability and be wary of the long-term costs of debt.
Lender and bank websites dominate as best options for homeowners embarking on refinancing research
Data from the DMS Mortgage Refinancing Trends Consumer Survey shows that about half of all homeowners plan to use a banking website or rate comparison website to start their refinance research. . Homeowners between the ages of 18 and 34 are almost twice as likely to rely heavily on bank or lender websites.
Online comparison of refinance loan options raises the temperature for lenders
As homeowners harness the power of digital platforms and technology for their mortgage research, purchase comparisons increase competition among lenders. Data from the DMS Consumer Survey on Mortgage Refinancing Trends shows that 43% of respondents plan to research between two and five refinance loan options, with only 10% planning to research one or more loan options. of five options. However, those 18 to 34 were more than twice as likely as the general population to indicate plans to research six or more loan options.
Mortgage marketers turn to performance marketing to meet loan refinancing demands
According to Joey Liner, DMS CRO, while the organic customer relationship management (CRM) system was enough to fuel pipeline growth in 2020, mortgage marketers and lenders may need to reposition their acquisition efforts. customers as this year dries up. In one video interview, Liner detailed how interest rate fluctuations affected organic lending volume at the end of the first quarter of 2021, saying: “[Mortgage marketers] are now looking at the performance marketing landscape and asking for more requests. ”
Want to connect with high-intention borrowers?
Digital Media SolutionsÂ® (DMS) creates people-focused marketing campaigns based on highly defined audience profiles to attract consumers most likely to convert. Using choreographed messages, DMS can build your campaign with your choice of channels to attract new borrowers. DMS Consumer Finance Connects consumer lenders with high-intent borrowers, deploying highly tactile service, proprietary digital media delivery, and sophisticated matching engines. Contact DMS today to find out how our first-party data asset, proprietary technology, and broad media reach can help you connect with high-intention consumers.
About DMS 2021 Refinance Mortgage Consumer Trends
the DMS 2021 Refinance Mortgage Consumer Trends An online survey revealed the main influencing factors that influence consumer decisions related to the early stages of the mortgage refinancing process. Data from Consumption Trends for Refinancing Mortgages 2021 The infographic is based on online survey responses from over 250 homeowners aged 18 and over in the United States. All of the survey respondents were homeowners who had refinanced at some point before or were considering refinancing in the future.
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