Since January 2020, the housing market has experienced exponential growth like never before. Low-interest rates, low housing inventory and increased home-ownership demand has led to unique challenges for mortgage lenders.
There has been an intense, laser-sharp focus on current production – how to continue serving customers and members when the stakes are high – and uncertainty surrounding the future.
The past 18 months have kicked up a lot of dust, while mortgage professionals have concentrated on their clients’ day-to-day needs as they navigated through unprecedented territory.
The question now is, “What happens when the dust settles?”
It’s not a question of if, but when the dust will settle. Organizations that have a plan to succeed after the fervor dies down will be optimally positioned to grow in the new norm.
Sustainability in uncertain times is born of asking and answering the right questions, and adapting to market changes.
For example, the industry will almost certainly experience reduced refinancing activity. That the Mortgage Bankers Association predicts up to an 80 percent reduction in this area during the fourth quarter of 2021 should have all of us carefully considering our next steps.*
So how can you prepare?
Offering a wide range of products
- Do you have comprehensive mortgage-lending solutions? Products like USDA, FHA and VA loans can be additional sources of revenue. Credit unions that are nimble and adaptive enough to offer these types of products and meet varied member needs enjoy a significant competitive advantage.
- For those members who can’t afford home-buying costs, credit unions should consider special programs. Down payment and low-income housing assistance can help members in challenging financial situations.
Do you have the right technology and processes in place to market your services and empower members today and into the future?
- Intuitive technology and a deep understanding of the real estate market can help you help your members buy a home no matter the circumstances. You need the ability to help your members quickly close on their loans – sometimes in as little as three weeks – because the reality is that if you can’t, the seller many times will accept another, all-cash offer. That means your credit union loses the business and your members miss out on purchasing their dream home.
- Can you identify where your members are in their home-buying journey?
- It sometimes seems like the big guys can see around the corner. They have data resulting from powerful business intelligence that helps them predict future home purchases. The good news is that you can, too. With the right partner, you can begin to identify members just beginning their new home search and use that information to communicate with them in meaningful ways before another institution does.
Engaging the right partners
- Third-party partners like CUSOs empower credit unions to anticipate their members’ next moves. They also offer variable cost structures, meaning a credit union only pays when a loan closes, enabling more predictable staffing models and other expenses.
- Many credit unions also consider third parties a great resource for offering more mortgage products like FHA and VA loans, state-of-the-art mortgage technology and business intelligence tools that help generate additional home loan volume and revenue streams.
The biggest takeaway from the past 18 months – which have brought historic mortgage lending growth – is that credit unions have still lost market share.
How can credit unions maintain and gain market share?
The keys are understanding that change is inevitable, you have to ask the right questions, and how partnering with trusted third parties can move credit unions and their members forward faster.
*https://www.cutimes.com/2021/07/22/refinances-remain-stronger-than-expected/ slreturn=20210803110343#:~:text=The%20MBA%20raised%20its%20third,%241.94%20trillion%20for%20the%20year.