2020 brought a lot of change for everyone, in both our personal and professional lives. Mortgage loan officers were forced to adapt. Going from not knowing if there would be enough capital to keep funding loans, to not being able to keep up with mortgage loan demand. Now that the refinance boom has slowed down, the best mortgage marketing ideas for 2021 are coming to light.
Keep reading to learn about the major mortgage trends in 2020 and the best marketing practices you can use in 2021 to keep homebuyers and homeowners coming your way for new mortgages and refinances.
Mortgage Trends in 2020: The Good, the Bad, and the Ugly
Let’s take a look at some of the biggest mortgage trends identified in 2020:
Falling Mortgage Rates
Early in 2020, COVID-19 helped propel mortgage rates downward in response to the uncertainty associated with the pandemic. Rates briefly spiked in March but continued to fall through the summer. Fannie Mae, Freddie Mac, the MBA, and NAR estimate that, on average, rates for the 30-year fixed mortgage will fall at least one-tenth of a point by the beginning of the fourth quarter, which puts the average at 3%.
Fewer Homes for Sale
COVID-19 tanked existing homes for sale from March 2020 to June 2020, according to data from the National Association of Realtors (NAR). At the lowest point, existing home sales were 25 percent lower than the same time in 2019. Despite many robust mortgage marketing strategies, caution ruled the market. With stay-at-home orders and fear of the spread of the virus, many homeowners who were planning to sell put off their plans to list their homes or took them off the market. Similarly, those looking to sell have been reluctant to list to reduce the risk of contracting the virus when strangers view their home during showings.
NAR data shows the total existing homes increasing in step with the end of quarantine in many states and economies reopening. Still, sales for homes under $250,000 were less in 2020 than in 2019. On the other hand, sales for homes over $500,000 have been soaring and remain around 25 percent more than in 2019. This suggests that mortgage brokers and loan officers can potentially cash in on large commissions for supersize mortgages.
With falling mortgage rates in 2020, a refinance boom was inevitable. You’ve likely did massive amounts of refinancing deals for existing and new customers, and so did your competition. In fact, NerdWallet reports that many mortgage lenders had more refinance applications than they could handle in February and March. Many homeowners in the U.S. have already taken advantage of falling rates. Now, they do not have much incentive to refinance again for a small change. This suggests that for 2021, you will see far less refinancing business than you did early in 2020 and in 2019.
Home Prices Remain Stable
Many homeowners feared the housing market would tumble in 2020 on the heels of the COVID-19-induced recession. Yet, home values have remained stable. According to the NAR, the median price of existing homes increased a little more than 2 percent in May 2020 compared to 2019, about a 4 percent change in June 2020, and approximately an 8 percent increase in July 2020.
It’s true that COVID-19 decreased the demand for homes. But, as mentioned above, many homeowners pulled their homes from the market or made a conscious choice to delay selling because of economic uncertainty. Lower inventory means a higher demand for the few homes on the market. This can lead to bidding wars in some markets.
Millennials Bought the Most Homes in 2020
It’s true that millennials have waited longer than previous generations to buy homes. But data shows 2020 as the year they made nearly 40 percent of all home purchases. The reasons for delaying a home purchase has revolved around affordability, student loan debt, and the tendency for millennials to wait longer to partner up or get married. Additionally, lenders have tightened requirements with 20 percent down needed for conventional mortgages.
COVID-19 has most likely caused further delays for some, but millennials are likely to start purchasing as the economy improves. They are the largest generation by population. Also, their median age is now 30, which places most in their prime home-buying years.
Mortgage Marketing Ideas in 2021
Last year brought many surprises and challenges for the real estate sector, the mortgage industry, and adjacent businesses. However, these challenges serve as an opportunity for you to adapt to the times and strengthen your business. Here are some of the best mortgage marketing ideas in light of 2020’s real estate trends that will help continue to generate leads.
Dial in Your Digital Presence
COVID-19 has forced businesses to close or transition to remote operations. Some companies have continued these policies even after mandatory stay-at-home policies were lifted in their state. Remote work means people are spending more time online. In fact, realtors report clients buying homes online without ever setting foot in a property – meaning they are likely shopping for mortgages online, too. You need to dial up your digital presence to make sure your name gets in front of online homebuyers.
Focus on First-Time Homebuyers
Of course, you will be willing to refinance deals. But for the remainder of 2021, you will likely yield higher returns and be more likely to convert to deals if you focus your efforts on first-time homebuyers. Those who were fortunate enough to escape the microeconomic consequences of COVID-19, but were ready to buy, have been sitting, waiting, and planning for the perfect time to buy. This also means they were likely putting away some more savings. This helps ensure that the slight rise in home prices won’t impact their ability to buy. Any marketing strategy in 2021 that targets first-time homebuyers, especially millennials, has an excellent chance of success.
Work Smart, Not Hard
With so much going on in 2021, you might feel overwhelmed. But you don’t want to let opportunities for new loan business pass you by. Invest in a customized marketing system that can help you target the right markets, save you time, and increase your sales through effective mortgage marketing strategies.