Mortgage Marketing

Recently, we had the pleasure of hosting a webinar with ACUMA focused on mortgage marketing strategies and the critical role of data in developing effective approaches. Today, I'd like to share some key insights from that discussion that can help elevate your mortgage marketing efforts.

The Common Pitfall: Insufficient Market Segmentation

One of the most prevalent challenges we identified is that many lenders don't dig deep enough when segmenting their market. Surface-level segmentation leads to generic marketing approaches that fail to resonate with specific customer needs. This one-size-fits-all strategy simply doesn't work in today's competitive mortgage landscape. Consider this. In 2023, more than 2.4 million loan applications fell through - either they were closed for incompleteness, withdrawn by the applicants, or preapprovals denied or not accepted. Another 2+ million loan applications were denied. The question becomes, did lenders have strategy or did they just buy leads?

You Need the Right Tools

During the webinar, we showcased Polygon Research's powerful analytical tools that lenders can leverage to enhance their mortgage marketing efforts, and go beyond surface-level market analysis to develop winning strategies.

Polygon VISION

For mortgage marketing, product, pricing, strategy, and fair lending compliance from the national level down to zip code level. This suite of tools also provides demographics, housing, and homeownership data down to the neighborhood level.

Polygon PULSE

For tracking trend and current mortgage market data in agency loan originations (volume, production, interest rate, credit score, LTV, DTI), as well as monthly demographic shifts at state, region, and MSA levels.

Mortgage Refinance Opportunity in 2025?

A significant portion of the presentation focused on discussing refinance opportunity and the six key levers that drive refinance activity and should be incorporated into any comprehensive refinance strategy. Refinance opportunity, specifically in the agency mortgage market, was fairly muted since late 2022, but beginning in 2024, we saw an uptick in the rate and term refinance activity. For context, cash-out-refinance stayed fairly stable over these 2-3 years of high interest rates, fluctuating between 94,000 and 140,000 cash-out refinance loans per quarter. Consider this chart below showing the trend of agency originations of cash-out refinance and rate and term refinance loans from Q1 2023 through Q4 2024. We see a six-fold increase in the rate and term originations, and fairly stable cash-out refinance levels, although this product segment increased sighnifacntly as well in Q4 2024 compared to Q4 2023.

This insight made us focus on this product segment of the market during the webinar. We went over six levers of refinance activity that lenders should consider to evaluate the size of the refinance opportunity and their relevant strength in their markets.

1. The Break Even Incentive (Lever #1) - An eligible borrower will refinance when their interest rate savings over the expected life of the new loan exceeds the one-time cost to refinance. As a rule of thumb, this refinance break-even incentive typically manifests as a 50 to 100+ basis points drop in rate from the original note rate.
2. ‍The Property Value Backing the Loan/LTV (Lever #2) - Higher LTV loans may not be able to obtain sufficiently economical rates to trigger refinancing. Declining home values drive up LTV ratios, making refinance difficult, while increasing property values and accumulated equity through regular payments put borrowers in a great position for both rate-and-term and cash-out refinancing.
3. ‍Loan Size (Lever #3) - Borrowers with large loan sizes stand to benefit significantly more in an environment of falling interest rates, while those with low balances are slower to respond to a decrease in rates due to the fixed costs of the refinance transaction.
4. ‍Lien Status (Lever #4) - Borrowers with second liens often refinance or pay off the second lien when refinancing their first mortgage. Conversely, having a second lien can make refinancing more difficult as it pushes the LTV/CLTV up.
5. ‍Borrower Credit Profile (Lever #5) - Borrowers with high credit scores are often targeted for mortgage refinance opportunity offers, while those with lower scores generally pay a combination of high fees and high interest rates, shrinking the refinance opportunity.
6. ‍Combined Impact of LTV and Credit Score (Lever #6) - Borrowers with high credit scores and low LTV are easy to underwrite, while those with low LTV but poor credit scores will have difficulty getting approval. For refinance opportunities, both segments are important to understand and serve, but lenders need breadth and depth of product lines.

Competitive Analysis and Benchmarking

We mentioned a few comprehensive analytical approaches that can help ensure that your marketing messages focus on areas where you have genuine competitive advantages and that you can accurately position your institution against key competitors. We showed just a few of the many analytical approaches that we make interactive in HMDAVision through several sheets and dashboards. For example, for Market Share analysis we pointed to the Lender Rankings Dashboard, Lender Snapshot, Pivot Tables for detailed analysis, and Interactive Bar Charts and side-by-side market map comparison.

Hard to Find Demographics Data Points

One of the most valuable sections of our webinar addressed often-overlooked demographic data points that can dramatically improve targeting. Through Polygon's tools, lenders can access difficult-to-find demographic facts such as:

• Citizenship status
• Employment, occupation, industry, and income details
• Household type
• Veteran analysis
• Affordability estimates
• Neighborhood-level data
• Languages spoken
• Relocation patterns
• Population and household counts
• Monthly trends with year-over-year comparisons

We discussed how these specialized data points can be incorporated into your segmentation strategies to identify opportunity gaps that competitors might miss.

Manufactured Housing

Recognizing the growing importance of manufactured housing in many markets, we dedicated a special section to marketing strategies for this segment. Our presentation included detailed analysis of property value trends for manufactured housing (showing significant increases from 2018 to 2023), monthly insurance payment data for manufactured housing, the homeownership rates for manufactured housing, the number of households in manufactured homes by geographic area, and so on. We also showed a bar chart from HMDAVision that showed the rising property values across different types of MH - with land and without land (chattel). The data revealed that manufactured home values financed with mortgages have increased substantially (from approximately $135,000 in 2018 to $215,000 in 2023), while chattel-financed homes have also seen significant appreciation. This often-overlooked segment represents a substantial opportunity for lenders willing to develop expertise and targeted marketing approaches.

Throughout the webinar, we reinforced the importance of going beyond surface-level market segmentation to develop truly data-driven mortgage marketing strategies. By leveraging the frameworks and methodologies we shared, lenders can create more targeted campaigns that resonate with specific customer segments and deliver measurable results.

Want to get the replay and the resources we shared?

For those who missed the live presentation, the complete webinar recording, slides, and additional resources are available for purchase through Polygon Academy. However, we're pleased to offer ACUMA members free access to these valuable materials – simply fill out the form below to receive your complimentary access and resources. We encourage you to review these materials and reach out with any questions about implementing these strategies at your institution.

This webinar was prepared and delivered through Polygon Research's collaboration with the American Credit Union Mortgage Association (ACUMA). ACUMA's mission is to be the premier source of home lending information, networking, and advocacy opportunities for credit union home finance professionals.