Data underscores opportunity for lenders to focus resources on purchase, home-equity opportunities
WASHINGTON, D.C., April 18, 2022 — Sales Boomerang, the mortgage industry’s top-rated automated borrower intelligence and retention system, today released its latest Mortgage Market Opportunities Report. The Q1 2022 report showed an increase in purchase and home-equity loan opportunities that could help lenders offset dwindling refi volume.
The Mortgage Market Opportunities Report draws on Sales Boomerang system data to identify market opportunities of relevance to today’s borrowers and lenders. To generate the report, Sales Boomerang reviewed data from more than 170 residential mortgage lenders that use its borrower intelligence and retention tools to monitor millions of customer and prospect records. Sales Boomerang then calculated and compared the aggregate frequency with which those contact records triggered loan-opportunity, prescriptive-scenario and risk-and-retention alerts during the fourth quarter of 2021 and the first quarter of 2022.
Sales Boomerang’s loan-opportunity alerts identify the contacts inside a lender’s database who are actively shopping for a mortgage loan or who may be able to benefit from a new mortgage loan. Across the sample group, the frequency of each alert type in Q1 2022 was as follows:
- Mortgage Inquiry Alert: 4.53% of monitored contacts (up 2.49% from Q4)
A customer or prospect has shopped with a competitor in the last 24 hours.
- EPO Alert: 2.54% of monitored contacts (up 38.04% from Q4)
A customer or prospect whose loan closed ≤ 6 months ago has shopped with a competitor in the last 24 hours.
- Credit Improvement Alert: 1.77% of monitored contacts (up 55.26% from Q4)
A customer or prospect has improved their FICO score.
- New Listing Alert: 0.85% of monitored contacts (up 32.81% from Q4)
A customer or prospect has listed their home for sale.
- Equity Alert: 9.13% of monitored contacts (up 6.04% from Q4)
A customer or prospect’s home equity has increased.
- Rate Alert: 4.33% of monitored contacts (down 14.60% from Q4)
The interest rate of a customer or prospect’s existing mortgage is significantly higher than current prevailing rates.
Sales Boomerang’s prescriptive-scenario alerts analyze not only whether a consumer could benefit from a given loan type, but also whether the consumer is credit-qualified to apply for financing. This additional layer of intelligence makes prescriptive-scenario alerts among the highest-converting available to mortgage lenders today. The frequency of each alert during Q1 2022 was as follows:
- Cash-Out Alert: 5.25% of monitored contacts (down 6.75% from Q4)
A borrower is credit qualified and has built sufficient equity to tap into the cash in their home.
- Rate-and-Term Alert: 4.93% of monitored contacts (down 50.95% from Q4)
A borrower is credit qualified and can benefit from the current interest rates for a refinance.
- FHA MI Removal Alert: 10.48% of monitored contacts (down 25.20% from Q4)
An FHA borrower has exceeded 20% equity and can remove mortgage insurance (MI).
For a subset of lenders that maintain servicing portfolios, the frequency of risk-and-retention alerts was as follows:
- Risk & Retention Alert: 32.87% of monitored contacts (up 5.42% from Q4)
A customer is engaging in one or more of 15 credit activities that may put their serviced loan at risk
- Mortgage Inquiry, EPO and New Listing alerts all increased in Q1 as consumers actively put themselves in the market for mortgage products. As the spring buying season picks up, lenders will need to be diligent in their borrower retention efforts, especially those looking to avoid an early payoff penalty.
- Despite the uptick in EPO alerts, Rate and Rate-and-Term alerts both decreased in Q1, another indicator that consumers are looking to purchase, not refinance. Of the alerts that decreased in frequency in Q1, Rate-and-Term alerts showed the biggest change, confirming the long-anticipated slowdown of the refinance boom.
- Slow is a relative term, however, as Equity alerts increased for the second consecutive quarter. As homeowners continue to build equity, lenders should continue to educate borrowers on home equity mortgage opportunities.
- After a significant drop in Risk & Retention alerts in Q4, the category saw a 5.42% increase in alerts in Q1. As more borrowers are flagged for exhibiting risky credit behaviors, mortgage servicers should continue to keep a close eye on their portfolios for default risk.
- Credit Improvement alerts saw one of the largest increases in Q1, signaling more credit-worthy borrowers are ready to begin shopping for a mortgage. Savvy lenders will recognize this opportunity to be proactive in their outreach.
"Experts have anticipated the switch to a purchase market for a year or more, but the market was slower to transition than initially expected. Our data verifies market opportunities are finally trending in the direction of purchase loans,” said Sales Boomerang CEO Alex Kutsishin. “However, as the purchase market heats up, it will be important for lenders not to get tunnel vision, as our data shows increased opportunities in home-equity lending as well.”
*Key findings and analysis provided for informational purposes only. The data represented in the Mortgage Market Opportunities report is historical. Past performance is not a reliable indicator of future results. Sales Boomerang accepts no responsibility or liability for readers’ use of the key findings or analysis included in this report