The volume of mortgage refinancing applications has reached record highs. Favorable interest rates since the start of 2020 have sparked a positive outlook in the mortgage industry, but now many lenders are struggling to keep up with significantly increased demand. Overall, refinancing activity is currently at its highest level since 2009, and lenders are scrambling to manage unprecedented levels of requests and requests for refinancing.
Refi’s current environment
Even before the Fed’s surprise rate cut last weekend, mortgage interest rates were at their lowest in 10 years. Last week, the 30-year fixed-rate mortgage offered an average interest rate of 3.29%, according to the Freddie Mac Primary Mortgage Market Survey (PMMS). In response to historically low interest rates, the Mortgage Bankers Association (MBA) has been asked to change its original 2020 refinancing forecast. The MBA now says a 20.3% gain in application volume is expected, which could bring total mortgage refinances to $ 2.61 trillion.
In a recent press release, Joel Kan, associate vice president of economic and industrial forecasting at the MBA, offered banks and lenders a projection for the spring real estate market. Kan said, âAs lenders manage the wave of demands and manage capacity, mortgage rates will likely stabilize but remain low for now. This, in turn, will support borrowers looking to refinance or buy a home this spring. ”
How should mortgage marketers prepare originators to handle the demand for record refinancing?
With a record volume of refinancing applications, it’s more important than ever to follow best practices to ensure your team is making the most of these rate cuts.
Automate communications with customers
Regardless of the size of the loan volume, every prospect expects a regular exchange of information from their lender. The best way to manage regular communication with current and potential customers is to deploy automated messaging. Lenders should consider sorting their contacts into a series of segments, based on intent and urgency, ranging from hot to cold. Hot contacts should receive communications more often. The communication rate should depend on the milestone reached by a contact.
Operational efficiency could be a barrier, but by keeping customers informed, a lender can set appropriate expectations among customers. No matter where borrowers are in a lender’s pipeline, potential borrowers should be encouraged to stay patient while staying organized. Processors, underwriters and compliance officers will benefit by helping the best-prepared customers first. The more prepared your borrowers are with documentation and the more aware they are of the requirements and needs of lenders, the more efficiently transactions can be managed. In a high demand market, efficiency will be directly linked to profitability.
Promote the benefits of rate foreclosure extensions
Due to the immense growth in the volume of refinancing loans, it is probably impossible for lenders to be able to effectively handle each refinance request with the same speed. The worst fear for many homeowners who refinance is losing low interest rates because their rate locks expired before they could proceed with loan processing. Rate foreclosure extensions can be used proactively to protect borrowers from the negative outcomes of interest rate fluctuations that could occur before their loans officially close. Rate foreclosure extensions allow borrowers to maintain guaranteed interest rates at the time of application for an extended and clearly published term. Rate foreclosure extensions are generally a paid option for borrowers, but during the refinancing push, lenders should consider offering rate foreclosure extensions at no additional cost to borrowers. Freezing rates over longer periods gives lenders the ability to manage operational efficiency and maintain a constant flow of application review.
Continue to generate demand
While the current refinancing volume looks incredible, now is not the time to sink or slow down. By continuing to generate steady demand, lenders can ensure pipeline stability in the second half of 2020.
Research all refinancing lead generation channels, including marketplace solutions and referrals. Also continue to nurture past customers to ensure customer loyalty in the future. A strategic approach to digital marketing, including email marketing, social media marketing, content marketing, digital advertising and lead generation, can help lenders acquire and retain customers, strengthen relationships with new and existing customers and to establish a healthy pipeline for now and in the future. .
Need to connect with consumers looking for refinancing opportunities?
Using a combination of rich content and borrower resources, DMS connects the right lenders with the right borrowers at the right time to fill pipelines, improve closing ratios, and scale businesses. DMS Consumer FinanceMT is a division of Digital Media SolutionsÂ® (DMS) which deploys a highly tactile service, proprietary digital media distribution and sophisticated match engines.