The mortgage market is still navigating through some choppy waters following this year’s election results. The announcement of president-elect Trump was a boon for the stock market, sending investors into a chaotic rush that resulted in the 10-year Treasury bond yield increasing. Because mortgage rates follow the 10-Year, the hike de-incentivized consumers from locking in their rates, meaning that one of the largest KPI’s mortgage marketers use to measure their business plummeted.
And, most industry experts are expecting rates to only increase further.
Because lenders run their businesses on locked loans, what this means for them is that the shopping intent of their consumers will now decrease. Mortgage shoppers will now be less incented to lock into a loan because of the increase in rates, and as a result they will hold off on locking their loan. We’ve already heard from several of our mortgage customers that they are seeing a substantial drop in consumer interest.
How Mortgage Marketers Can Regain Control
The key to normalizing lock rates, or any conversion milestone for that matter, during periods of uncertainty, is using data to make smart decisions. In fact, data is now more important than ever to mortgage marketers, to have a north star when the waters get choppy. Being able to predict the likelihood of an outcome using data and predictive analytics—such as identifying consumers who are truly looking to lock in their loan—is not just smart marketing anymore; it is now crucial to success.
Investing in resources that help a marketer identify how to segment and triage consumers, and when to focus on and approach them with a particular message, will help themstabilize their business and regain a semblance of predictability over their world when the market seems unpredictable.
As philosopher Epictetus said “It’s not what happens to you, but how you react to it that matters.” The market is going to do what it’s going to do; how you respond is critical. Having the data to inform those best decisions is the best strategy.
Businesses facing risk, volatility, and uncertainty have historically hedged the risk by cutting expenses. They have done this either by not investing as planned or by cutting headcount and other expenses. Either approach can have an extremely negative impact on the business.
We’ve all read or heard about Warren Buffett’s recommendation to spend into uncertainty; but, to do it with confidence you need to do it wisely by using data, facts, and math to make the right decisions. It’s a perfect example of how to apply that logic here to make better decisions with data. Don’t choose to cut back on that dollar, but rather, to spend it with purpose and confidence that you will get two dollars back in return.
Jeff Piotrowski is Senior Director, Insurance at Jornaya.