Future of Credit Union Mortgage Business? First-time Homebuyers

Move over refinancers … make way for first-time home buyers.

Earlier this year, Mortgage Cadence wrote an article for summarizing a prediction by the Mortgage Bankers Association: Not only is the mortgage-loan refinancing stream about to dry up, it’s about to dry up forever – or at least for a long, long time.

Think about it. Since 2009, credit unions have seen a slew of members refinance their mortgages. According to the Obama administration’s U.S. Housing Market Scorecard, more than 16.2 million homeowners refinanced their mortgages between 2009 and 2012. And SMR Research estimates more than 2.2 million people refinanced twice in that timeframe to take full advantage of the historic low mortgage rates. With so many people locked into a mid-3 percent mortgage rate, odds are they won’t be looking to refinance again anytime soon.

For credit unions, it’s a prime opportunity to turn attention to first-time home buyers. A survey by Trulia earlier this year revealed that 93 percent of renters aged 18-34 have plans to purchase property someday – with 31 percent of them planning to act in the next two years. 

Purchase-mortgage growth and first-time home buyers

As people gain more confidence in the economy, those who put off buying homes are stepping into the market. And with home prices starting to rebound and bloated inventories beginning to slim down, more people feel the timing is right to put their homes up for sale. Factored together, these are good signs for mortgage providers. Many first-time buyers will be among the one million new households that are set up annually – buyers that are an ideal target for credit unions. Not only are they large in number, they often seek guidance and expertise to help them with their home-buying process, and credit unions are in a good position to provide both.

Here are some tips to help your credit union build relationships with first-time buyers:

• Create member awareness:  Make sure you budget for marketing the real estate services and mortgage programs available at your credit union. You want members to think of you first when they are ready to buy their first home.

• Expand services beyond mortgages: Buying a first home involves more than just a mortgage loan. Think about what members need to get started: online search tools, agent referrals, research on local neighborhoods, links to helpful home-buying articles. Consider expanding your mortgage program into a full-service real estate program.
  

• Track your leads and follow-up: Follow your members’ progress in their home-buying efforts, from start to finish. Looking for the right home can take several months. Keep communication lines open so you don’t lose the lead.
  

Consider this real-case scenario:

A young married couple was looking to buy a first house. Each was a long-time credit union member, had a secure job and good credit ratings. After the couple researched desired neighborhoods, secured a loan pre-approval online, and connected with an agent through a friend’s referral, they found their dream home and were ready to buy. But they had some questions. Three different times they called the credit union looking for answers; and three times they were directed to the website. Frustrated, they sought advice from their agent, who steered them toward his preferred loan officer … at a bank … where their questions were answered immediately and their loan was approved.

Members are looking for value when it comes to a real estate purchase or sale. To avoid lost opportunities, learn what they need and then provide it. Going the extra step for a first-time homebuyer will position your credit union to meet the needs of future home-buying prospects.