Members – Your Untapped Source for Mortgage Growth
By Jeff Vossen | SVP of Mortgage Origination & Operations
Only one of every 200 credit union members obtains a mortgage from their credit union on any given year. Members are trusting someone else to fund the biggest purchase of their lives, which is a missed opportunity for credit unions wanting to be their members’ primary financial institution.
How much mortgage volume is available within your current membership?
The short answer is more than you may realize. Here is a simple formula to determine how many mortgages you could be providing to current members:
A x B x C x D = E
- A — Total membership
- B — Percent of members eligible for a mortgage. A good rule of thumb is 25 percent after removing seniors, kids and sub-prime borrowers.
- C — Percent of consumers seeking a mortgage annually. Generally, a consumer is in the market for a mortgage once every seven years or 15 percent.
- D — Close rate. 10 percent is a conservative target for percent of opportunities won, and some estimate the industry average to be 19%.
- E — Number of new mortgages from existing members annually.
30,000 x 25% x 15% x 10% = 112
3 Ways to Increase the Number of Members with a Credit Union Mortgage
Credit unions continue to grow mortgage business, but there is still work to do. The easiest place to start is the current membership which requires three things:
- Marketing — Members must know you offer mortgages and why a credit union mortgage is better than a bank. That bank is likely making sure their customers know they offer home loans. They send postcards, provide statement inserts, post on social media, flash it on their website and hang signage in their branches. Credit unions should do the same to generate awareness.
- Competitive Offering — To compete and serve a diverse membership, you should offer a full suite of products including conventional, FHA, VA, first-time home buyer and jumbo mortgages. You can portfolio these on your balance sheet, but gaining access to the secondary market will help free up liquidity while ensuring you can offer competitive rates. When looking for a secondary market partner, don’t underestimate the importance of maintaining member relationships with your brand front-and-center during the entire life of the mortgage.
- Knowledgeable Staff — There is nothing worse than a member asking about mortgages and an uninformed employee providing inaccurate information. A member facing employee must know a lot to serve members, so rather than rely on current employees to answer mortgage questions you might consider hiring full-time mortgage loan originators and/or a third party who can originate your mortgages. A knowledgeable mortgage staff or partner ensures more members have a quality mortgage experience.
Even if your credit union is hitting your annual budget, imagine how many more members you could be serving with a mortgage. You’re in the business of helping members achieve financial success. Today, there are a lot of those members getting home loans from someone else … it might as well be you.