5 New Year’s Resolutions to Help Lenders Thrive in 2021

2020’s mortgage market was unlike anything we’ve seen before. At the dawn of the COVID-19 pandemic, the Fed slashed interest rates, and not long after, buyers began scrambling for new homes due to increased buying power, while eligible homeowners locked in lower interest rates through refinancing. These trends amounted to one of the largest real estate booms we’ve seen in decades.

As the year comes to a hectic finale, the team at Maxwell spoke on the Clear to Close podcast about what mortgage companies should be preparing for in 2021. Let’s dig into five resolutions that will help you amp up your lead generation, satisfy customers, and supercharge your business for years to come.

Resolution #1: Prepare for a purchase-heavy market

This year saw some of the highest refinance volume in recent history, driven largely by millennials entering the market and historically low federal interest rates. But how long will this environment continue?

Chief Economist of the Mortgage Bankers Association (MBA) Mike Fratantoni warns of a coming shift. Fratantoni projects that by the end of 2021, 70% of eligible homeowners will have refinanced their homes, bringing total volume for the year to around $900 billion, down from $1.9 trillion in 2020.

“We think next year, with just somewhat higher rates, you’re going to see a fairly sharp falloff in refi activity, particularly in the second half of the year,” Fratantoni said at the MAXOUT 2020 Fall conference earlier this year.

Fratantoni believes the refinance boom will continue through Q1 and Q2 of 2021, then the market will shift towards home purchases to close out the year, potentially amassing a record-shattering $1.59 trillion in total purchase volume. He expects unemployment to continue to rebound, coupled with a larger share of new millennial homeowners entering the market. These shifts, along with risk averse homeowners finally feeling ready to move on now that there’s a vaccine for COVID-19 and with election uncertainty quieting, should lead to dramatically increasing home sales.

As for your business, it’s important to strategically think about your practices and how your team can adjust. Ask questions like:

—Where are we getting our leads from?

—Are we working with a network of real estate agents?

—Is our company website advancing our goals and helping build trust with our prospects?

2021 is the year to take a closer look at your brand strategy and determine where you can make improvements. Marketing is a major determining factor in your success, especially in a purchase-heavy market full of online millennial buyers actively searching for mortgage information and insights on the home buying process.

Resolution #2: Find ways to make your business more efficient

While you might not have a problem with volume at the moment (in fact, you might have more than you can handle), it’s likely that won’t always be the case. Real estate markets can shift on a dime, and your mortgage business needs to be prepared for that. Margins can compress, volume can fall off a cliff, and suddenly, you might face the tough decisions of layoffs, downsizes, and more.

Luckily, you can prepare for adversity by making your business as efficient as possible.

One of the quickest ways you can start this process is by auditing the various departments within your organization. Is human resources missing out on fresh talent because of a burnt-out interviewer who needs motivation? Is the marketing department targeting the right customer segments so your bottom line is improving and your budget is wisely spent? Is sales losing too many leads?

Solving problems within your departments can drastically change the state of your business and prepare you for tough times ahead.

Another step you can take is to develop tighter contracts and better prepared loan packages. Various lenders will award extra basis points as a bonus to companies with well-made packages, so make sure you do your research.

Finally, ensure you’re not wasting resources. For instance, instead of printing out paper for everything, consider using digital solutions to save, edit, and handle documents. This alone can reduce your ink bill by thousands of dollars each month.

Resolution #3: Get involved with your community

It’s hard these days, but getting involved with your local or online community remains one of the best ways to make a positive impact while achieving the business goal of filling your marketing funnel. Millennials are not only going to be the primary market segment to target this coming year, but they’re also some of the most active in the community.

Strikingly, around 20% of millennials state that they are unfamiliar with any part of the home buying process. This presents a significant opportunity for you and your team to capitalize on educating them on what it takes to purchase a home. You’ll need to be creative, since in-person events don’t work well during a pandemic, but thankfully the modern age presents us with tons of digital solutions for meetups and gatherings.

Hosting webinars can be a great way to encourage millennials to get involved in buying their own home. This can be done as easily as running a Facebook or Google ad to get signups. You could also create well-developed and meaningful content that shows up in search engines when buyers search for keywords surrounding mortgages and buying a home. Not only does content make your business more reputable, but it serves as a constant lead magnet that can generate new customers passively throughout the day.

Whichever strategies you deploy, getting active with the buyers around you remains one of the best things you can do for your business.

Resolution #4: Capitalize on your current conditions

Over the course of 2020, home prices have appreciated, which means there’s more equity in the market. This gives your business the perfect opportunity to reach out to a target demographic, asking them if they’re ready to put their equity to good use while they can.

You’ll want to be smart about this. Sending out postcards and mailers to a mass-selected group of homes is a one-way ticket to the trash bin. Instead, invest in technology that can help you find and target potential prospects through the use of data and analytics. A cheap and effective strategy is to simply comb through your customer relationship management (CRM) suite and find customers that you know have extra equity and are ripe for a downsize, an upsize, a HELOC, or something else.

You should also be viewing your customers as long-term relationships. Not only does it cost more to acquire a new customer, but when you think about customers transactionally, oftentimes your company’s service doesn’t match your competition, and you’ll likely lose your customers next time they move or decide to refinance. Instead, treat customers like family and deliver outstanding service. This will result in better cashflow, more referrals, and more opportunities to interact with real estate agents, giving your firm another avenue for leads.

Resolution #5: Keep your employees motivated

There’s no question about it: 2020 was a tough year. Not only did we grapple with a once-in-a-lifetime global pandemic, but we had to deal with an exploding mortgage market that kept our employees up late simply handling the sheer amount of volume.

While we always welcome volume in the mortgage industry, that doesn’t mean we don’t burn out. A recent survey by FlexJobs and Mental Health America found that 75% of workers felt burnt out in 2020, with 40% reporting their burnout was a direct result of COVID-19.

With the switch to remote work and the endless distractions that come with it, as well as a skyrocketing mortgage market and the inability to see your employees except through Zoom, how do you manage your company’s morale and culture?

There are a few solutions, but you’ll have to be creative. The point is that you’ll need to be thinking about this strategically moving into 2021. Whether you catch your employees up to speed on the Harvard Business Review’s best remote work practices or host Slack rooms for company dialogue outside work, you’ll need to stay communicative and supportive. Checks and bonuses are always nice, but the circumstances require greater activity from management. Be ready for more challenges next year.

Final Thoughts

Usually, mortgage companies get downtime towards the end of the year, when the market subsides and homeowners stay put for the holidays, but this year has gone against every trend we typically see.

These five resolutions should be top of mind going into 2021, as we prepare for another year of spontaneous changes and unprecedented realities. If you and your team want to delve into more detail on these resolutions to prepare for next year’s challenges, be sure access the full content by tuning into episode 14 of the Clear to Close podcast.

Cheers to your 2021 planning!