12 Dec 2018

Overcoming Rising Interest Rates

Surely your customers have seen the perpetual, panic-inducing headlines:

“Up, up, and away! Mortgage interest rates continue to rise!”

“Will increasing rates take a big bite out of our wallets?”

“Act now before interest rates skyrocket too high!”

So what exactly does it mean for today’s borrowers? To properly answer that question, let’s first take a quick refresher course in Federal Reserve policy. Away we go …

One of the Fed’s most important tasks is to promote moderate long-term interest rates. Following the Great Recession, the Fed established a near-zero target range for its federal funds rate. As the economy improved, the Fed incrementally raised its benchmark rate. There’s been eight increases since December 2015, taking the rate to a current range of 2% to 2.2%.

Got all that? Excellent!

Now of course, the Fed does not directly set mortgage interest rates. But its policy of incrementally raising its benchmark rate can indirectly affect mortgage rates. So when the Fed announces another increase—like it did in September—the headlines and anxiety focused on climbing rates starts all over again.

Fortunately, there is one approach that can help loan officers overcome the challenges associated with today’s ever-increasing rate environment: omni-channel marketing. Read on to discover how.

The right message—at the right time & place

Today’s borrowers are more informed, more connected, and more selective than ever before. And oh yes, they’re demanding, too—and what they’re demanding is an integrated user experience across online and offline channels.

This is precisely what an omni-channel marketing approach delivers. Customers are given the ability to move effortlessly between channels, depending on where they are in their home financing journey. It’s all about connecting an individual with the right message at the right time and place.

For example, early on in the financing journey, that right message could be a targeted email detailing the many benefits of homeownership. Included in the email is a link to a landing page featuring tools and information designed specifically for first-time buyers. That could mean a calculator for determining monthly mortgage payments or interactive graphs displaying the latest rates.

Whatever the case, the key is the experience is a seamless one. The customer jumps from an email to a landing page, and the look and feel of both is cohesive.

Video’s many possibilities

Video has become one of the most impactful solutions in the omni-channel toolkit. Video content allows you to appeal to the needs of your customers in a truly creative and authentic way. According to 70% of marketers, video produces more conversions than any other type of content.

Video can be especially beneficial to customers ready to navigate the mortgage process. Imagine the possibilities: an informative and engaging video that details each financing step, from preapproval to closing day—or maybe a friendly introductory video that includes background on available loan programs and testimonials from satisfied customers.

Long live direct mail

It’s not an omni-channel approach unless you are utilizing each and every channel. And yes, this includes direct mail, a channel many marketing experts classified as obsolete. Of course, this couldn’t be further from the truth. A Direct Marketing Association report found that direct mail’s response rates are 10 to 30 times higher than that of digital.

As part of an omni-channel marketing plan, direct mail fits perfectly with digital strategies. For example, a direct mail piece matched with a follow-up email and targeted ads on social media creates consistent, meaningful customer engagement with your brand.

Get on board with texting

With its high open and response rates, text messaging is another impactful way to engage with customers within the omni-channel sphere. Studies show that 95% of text messages are opened within three minutes while 45% receive a response.

We are excited to report that LoyaltyExpress has recently expanded its marketing automation platform to include text messaging. This powerful tool is fully automated to ensure timely awareness and collaboration during the entire mortgage process.

Realtor.com predicts that rising rates will lead to an 8% increase in monthly housing costs as well as a 2% decline in home sales. In the coming year the market will become considerably more demanding. Strengthening those customer capture and retention strategies will be a must! Omni-channel marketing is the solution that can get you there. Reach out to us today to learn more.