Your team works hard to bring in business. But can they do more to connect with consumers sitting on tappable equity?
Read on for actionable insights that will empower lenders to engage with highly qualified consumers and help them achieve their financial goals.
As of July 2019, U.S. homes reached an all-time high of $6.3 trillion of available, or “tappable,” equity.
of tappable equity is held by consumers with very good credit.
Note: By credit score and first-lien interest rate bucket
Credit score: >760
Credit score: <760
Note: By credit score and first-lien interest rate bucket
Credit score: >760
Credit score: <760
70% of consumers with low first-lien rates have excellent credit (>760), making them ideal candidates for relationship development. These consumers are likely to stick with their first mortgages and become top-notch prospects.
Low first-lien rates holders are unlikely to seek out refinancing of their mortgages any time soon. For these consumers, home equity is a perfect conversational inroad, regardless of credit score.
Source: “Mortgage Monitor: July 2019 Report,” 2019, Black Knight
With higher interest rates and less time to pay back large sums, credit card users can easily fall behind...
...leaving financial institutions responsible for collecting the debt from their customers, which can result in a tarnished relationship at best.
Why do consumers continually choose high-rate credit cards when roughly 45 million homeowners have an average of $140,000 in tappable equity available to them?
It’s time to get back to the basics with your customers.
Guide your customers away from credit card default by choosing a solution better suited for their needs.
Your team should be aware of the two main ways to maximize customer engagement.
Hint: One approach will help earn customers for life.
Seek margin with products like credit cards.
Come with higher
interest rates
Offset by higher
balances
Seek volume and deeper relationships with home equity.
Come with lower
interest rates
Used for larger
spending
of homeowners are paying for home improvements with credit cards.
In 2017, home projects grew in scope when consumers used HELOCs to fund them.
With home equity, consumers find they have deeper resources available for projects that add value, such as installing energy-efficient windows or remodeling a kitchen.
Funded with cash
Home equity conversion (HEC)
Source: “The State of the Nation’s Housing,” 2019, Harvard Joint Center for Housing Studies
When you know and understand where your customers’ home remodeling goals lie, you’ll be able to better meet them.
A customer seeks a second lien outside your organization.
The new loan process might get past other credit triggers that you monitor.
Despite this, you still need to approve the new lender’s re-subordination request for the customer’s home equity loan or HELOC...
...giving you a chance to counteroffer to preserve the loan and the customer relationship.
There are more homeowners with tappable equity than your team might think.
Source: “Home Prices, Housing Wealth and Home Equity Extraction,” 2018, The New York Federal Reserve
were age 60 and older
were aged 45-60
were under 45
Top qualities:
Earn high wages
Have good credit
Considering or engaged in home improvements
Top qualities:
Are looking to downsize home
Have smaller portfolios but significant equity
Want to keep nest egg intact
Knowing your customers and what’s important to them will not only help you close home equity offers...
...it will allow you and your team to establish meaningful and long-term customer relationships.
By understanding the characteristics of highly qualified consumers and the evolving market trends, your team will set their customers on the right financial path with home equity opportunities.
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The marketing strategies and ideas outlined in this visual are offered by Julian Hebron and The Basis Point, not Blend itself.