It’s safe to say federal interest rates have been anything but consistent over the last year. As of Friday, October 21, the current average rate of a 30-year fixed mortgage is 7.32 percent—up 15 basis points from the previous week. That’s because the U.S. Central Bank raised the federal interest rate by three-quarters of a point back in September, which was the third rate increase this year. Experts predict a fourth increase by the end of the year, resulting in a rate of at least four percent. All these rate changes make life harder for buyers thinking about purchasing properties. However, they also impact brokers like you, who negotiate with lenders on behalf of your clients. You might find it hard to generate new mortgage broker leads because potential buyers are reluctant to buy right now. This post tells you how to overcome this problem.
Why Is the Current Interest Rate Crisis Bad for Mortgage Brokers?
When the federal interest rate rises, it has a trickle-down effect on mortgage interest rates, which is bad news for brokers. When financial institutions like banks and credit unions increase their rates in line with the federal rate, clients who typically use your brokerage services might not want to purchase a property until the economic landscape improves.
You might already have a few clients who pulled out of buying a residential or commercial property because they can’t afford mortgage repayments. You might also find it difficult to source new leads interested in your services because fewer people are purchasing properties. Fewer clients means less commission, which can impact your bottom line.
Thankfully, there are various ways you can navigate the current interest rate crisis and continue to generate a steady stream of leads for your business.
Understand Why Interest Rates Are So High
Understanding why the government raises the federal interest rate can put you in a better position when generating leads for your brokerage. The primary motivation behind increasing the federal rate is inflation, which affects the cost of almost all products and services in the United States.
When inflation increases—because of supply chain issues resulting from the COVID-19 pandemic, the War in Ukraine, and other recent developments—so does the cost of products and services. That means your clients have to spend more money on things like food, gas, and utility bills, leaving less money available for mortgage repayments.
When lenders increase these repayments because of rising interest rates, many clients might not be able to afford to finance a property. Increased rates could mean a client has to spend hundreds of dollars more a month on mortgage repayments, depending on the size and length of their loan.
Tell Prospects To Lock in a Current Mortgage Rate
As previously mentioned, the current federal interest rate will likely rise again. If it does, mortgages will become even more unaffordable for many of your clients. That’s why you might want to encourage prospects to lock in a current rate offered by a lender. You can explain that while current rates might not be attractive as those six months or a year ago, they are likely to be better than the ones offered by lenders this time next year.
It might make sense for a prospect or lead to take a mortgage now rather than wait months and months or even years to purchase a property—that’s because nobody knows how long it will take for interest rates to drop again, not even the government. Explaining the current interest rate crisis to potential mortgage broker leads this way in emails and blog posts will allow you to continue to do business and generate commission from loan deals.
Create an Omnichannel Marketing Strategy for Mortgage Broker Leads
Interest rates and mortgage repayments are in a constant state of flux. So there’s no better time to explain the current situation on as many marketing channels as you can. You might already have a blog that talks about recent developments or update your social media pages with information about rate changes. But have you considered other marketing methods that increase your reach and allow you to generate new leads?
Consider starting a YouTube channel that provides potential leads with sound advice about the interest rate crisis and what it means for people interested in purchasing properties. You can use your channel to inform new audiences that haven’t read your blog or social media channels and convert these audiences into clients.
What about an SMS campaign where you send tips about mortgages and showcase loan deals to potential leads? SMS marketing can reach people on the go who don’t have an internet connection and drive interest in your services at a time when you need as many leads as you can generate.
Take Lead Generation Offline
Most mortgage brokers generate leads online, but offline methods can prove just as lucrative. Try attending networking events where investors building their portfolios might be looking for a broker like you to negotiate mortgage products with lenders on their behalf.
Another offline method is direct mail, which can help you generate leads who might not respond well to digital marketing methods like SEO, paid search, and email automation. Although creating and sending direct mail pieces requires an outlay, this method could generate a return on your investment.
With interest rates rising, some buyers might not want to purchase properties right now. That can impact your brokerage and make it difficult to generate commissions on loan products. Follow the tips above to produce more online, and offline mortgage broker leads to compensate for a shortfall in your current client base.
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