The last time we blogged, we discussed how you need to prepare your mortgage business for launch in the New Year. In anticipation of that launch, you should do what every good air and space traveler does: create a solid flight plan.
As I continue to work closer with the credit unions here on Earth and listening to all of you, I’m confident you already have a good flight plan in place that is geared toward helping with and satisfying your members’ financial needs. As I see it, there are two primary components in a credit union’s flight plan: Member Service and Product Offerings.
Solid Member Service which exceeds member expectations is already engrained into the fiber of your credit union. So that leaves us with Product Offerings. Some of the most common products offered by credit unions include savings and checking accounts, credit and debit cards, digital banking tools, auto and personal loans, etc.
However, many credit unions are lacking the one product that will help their members complete what is probably the largest purchase of their lives: home mortgages. There are various reasons why a credit union decides not to offer mortgages, but in the New Year, I believe it’s time to reconsider and blaze a trail to home ownership opportunities for your members.
But don’t take my word for it—just look at the facts:
Total Mortgage Originations in 2018 = $1.64 Trillion: That’s “Trillion” with a capital “T.” The Mortgage Bankers Association, which provides this annual statistic, estimates that number rising thanks to solid home sales and refinance opportunities over the past year. You want to be sure your credit union is getting a slice of that moon pie (and who doesn’t love moon pie, right?!).
Your Members are Getting Mortgages, but Not Always from You: Obviously, your members aren’t getting mortgages from you if you don’t offer them, but let’s look at it this way. Stratmor Insights estimates that last year, credit union members closed on 3 million mortgage loans; however, only 1 in every 6 of those members who closed decided to finance through their credit union. In other words, the need is there. It’s time to keep your members with the lender they trust—your credit union.
Member Mortgages Lead to More Opportunities: There’s a lot to be said about keeping your members loyal to the lender they trust. Did you know that, on average, a member who originates their mortgage through their credit union has 7 additional pieces of business with the CU (including many of the products I’ve already mentioned above)? If they don’t originate their mortgage through you, that number drops to 4 pieces of business.
One Home Loan = 6 Auto Loans: While auto loans are a great product to offer your members, it takes six of them to equal the fee income from just one mortgage loan. Not only that but it takes nearly 5 years to get a return on investment versus 1-2 months for a mortgage loan. Just another thing to consider as you strive to be your members’ trusted financial partner.
CUs only Have 9% of the Mortgage Market: This number from Mortgage Daily tells us one thing: credit unions are only scratching the surface of this huge market opportunity. But why is the CU market share so low? I believe there are three primary reasons:
- Members don’t know their CUs offer mortgages
- Some CUs aren’t offering a competitive mix of mortgage products
- Sometimes, internal CU staff lacks the time, expertise or comfort levels to offer mortgages
Which of these categories do you and your credit union fall into?
No matter your answer, the solution is to realize that mortgages are big business and a true asset to offer your membership. We’re still early on in this New Year—what a perfect time to launch new opportunities. Make sure to work mortgages into your flight plan for 2020, and always remember if you need any help or expert guidance during your journey, ol’ Mort and myCUmortgage are happy to be your travel companions.