Mortgage Trends

This series will dive into our monthly State of the Economy report, providing a snapshot of the top monthly economic and credit data for those in financial services to proactively shape their business strategies. After again announcing no change in the target fed funds rate during their May meeting, the Federal Reserve continues to face the decision of when to begin cutting rates. The economic data released this month only complicated this decision, as growth came in well-below expectations and the labor market seemed to ease on several fronts. However, there was only minimal downward progress in inflation, especially considering the high prices seen over the past few months. In this month’s report, we dive into the data developments that comprise this economic story. Data highlights from this month’s report include: Economic growth in Q1 came in at 1.6%, under economists’ expectations. Underlying components of consumer spending and business investment remained solid. Inflation cooled in April, with annual headline inflation down from 3.5% to 3.4% and annual core inflation down from 3.8% to 3.6%. Consumer sentiment fell 13% in May, due to stubborn inflation, low growth, and easing in the labor market. Check out our report for a deep dive into the rest of this month’s data, including the latest trends in job creation, spending, and the fed funds rate. Download May's State of the Economy report  To have a holistic view of our current environment, it’s important to view the economy from different angles and through different lenses. Watch our team of experts discuss the latest economic and credit trends in the recording of our latest macroeconomic forecasting webinar, download our latest forecast scenario report, or listen to our latest Econ to Action podcast for views on the economic environment in different market segments. For more economic trends and market insights, visit Experian Edge.

Where in the U.S. would you guess first-time homebuyers are having the most success securing a mortgage? The answer may surprise you. While over one-third of first-time homebuyers reside in our most populous states, California, Texas, Florida, and New York, research from Experian Mortgage reveals they are having greater success securing a mortgage in more affordable locations, such as Minnesota, Iowa, and Indiana. Understanding who is buying properties around the nation and what drives their decision provides insight into where they are buying and why. This knowledge paves the way for mortgage lenders to create more targeted and effective marketing strategies to gain trust and win loyal borrowers. As discussed in a recent blog post on generational behaviors, Generation Z (Gen Z) and Generation Y (Gen Y) account for a sizeable majority of first-time homebuyers and nearly half of repeat buyers. Mortgage lenders who understand what motivates these young buyers and meet them where they are will be better positioned to win. Why understanding buyer traits and their motivations matters Nearly 70% of all renters are in their early 40s or younger. With rents up more than 30% since before the COVID-19 pandemic, many Americans yearn for the stability that homeownership brings to their financial well-being. Younger buyers are increasingly focusing on their overall financial health. Experian's survey of more than 2,000 millennial and Gen Z consumers across the United States revealed: ‘Better understanding personal finance’ is a goal for most consumers within both groups. Nearly 70% are actively searching for a trusted source for personal finance information. Over 30% of first-time homebuyers have a household income under $90,000 annually. They want to make decisions that align with their financial goals and position themselves well for the future, which is likely why we are seeing a higher concentration of first-time homebuyers converting in lower cost of living areas, such as the mid-west. Even for a mortgage lender outside of the geographically preferred states, those who understand their areas with minute specificity and know where opportunity and affordability meet will be best positioned for these buyers. Why strategically positioned lenders will win the day Affordability remains the operative word. The housing supply shortage heavily impacts affordability.  A lack of new housing construction and limited existing home sale inventory contributed largely to the limited for sale stock. Lower interest rates can influence the affordability outlook, but rising inflation and the Federal Reserve not yet moving to lower rates has resulted in mortgage interest rates creeping upward this year.1 Additionally, overall economic indicators influence the housing market. While the Federal Reserve does not directly dictate mortgage interest rates, mortgage rates are influenced by the actions they take. Federal Reserve Chairman Jerome Powell’s recent remarks that the Fed will not likely lower rates until much later in the year due to inflation signals mortgage rates are unlikely to decrease soon.2 Mortgage lenders who dive into buyer behaviors, geographical nuances, and truly service these potential buyers will benefit. By employing market and buyer savvy strategies that resonate, you can drive both short and longer-term business growth. For more information about the lending possibilities for first-time homebuyers, read our latest white paper and visit us online. Download white paper Learn more 1 “Mortgage Rates Move Toward Seven Percent as Markets Digest Incoming Data,” freddiemac.com 2 “Federal Reserve Issues FOMC Statement,” March 20, 2024, federalreserve.gov

This series will dive into our monthly State of the Economy report, providing a snapshot of the top monthly economic and credit data for those in financial services to proactively shape their business strategies. During their March meeting, the Federal Reserve announced no change in the federal funds rate and released their updated Summary of Economic Projects for the remainder of 2024 and 2025. In response to slow but steady cooling inflation, they maintained projections for three rate cuts by the end of 2024. Additionally, they upgraded their growth projections and lowered their unemployment projections, signaling more optimism toward the U.S. economic trajectory. In this month's report, we dive into the data developments that are contributing to this economic story. Data highlights from this month's report include: The Federal Reserve held rates steady and maintained projections for three rate cuts by the end of the year. Inflation progress slowed, with annual headline inflation flat and annual core inflation ticking up from 3.2% to 3.5%. The median rent-to-income ratio increased 4.1% year-over-year to 37.9% nationally. Check out our report for a deep dive into the rest of April's data, including the latest trends in income, originations, and job creation. To have a holistic view of our current environment, we must understand our economic past, present, and future. Check out our annual chartbook for a comprehensive view of the past year and register for our upcoming macroeconomic forecasting webinar for a look at the year ahead. Download April's State of the Economy report  Register for webinar For more economic trends and market insights, visit Experian Edge.

Click here to watch our recent webinar on first-time homebuyers. The younger generations comprise nearly 70% of first-time homebuyers, according to recent Experian Mortgage research. Understanding the generational traits of first-time homebuyers, particularly motivated younger generations, is critical to building highly targeted marketing strategies. Gen Z and Gen Y are essential in the first-time homebuyer market and represent close to 40% of repeat buyers, indicating they consider homeownership important beyond just their first purchase. Generation Y borrowers lead the pack Generation Y borrowers see homeownership as part of the American Dream but have waited longer than previous generations to purchase their first home.1 Additionally, as digital natives, they have grown up in a world with online resources and digital tools, making the home buying process more convenient for them. They can effortlessly research homes, compare mortgage rates, and even complete paperwork without leaving their home – a time and cost-saving advantage. With their desire for stability and their technological proficiency, it comes as no surprise that Gen Y borrowers are at the forefront of the homebuying market, accounting for 52% of all first-time buyers. Keep your eye on the next wave: Generation Z borrowers Although Generation Z is the youngest group with both young adults and those entering adulthood, they should not be overlooked in the real estate market. Despite their age, Gen Z possesses characteristics and tendencies that make them legitimate potential first-time homebuyers. Having grown up in an era characterized by technical advancements and economic instability, Gen Z has observed various challenges, such as the impact of the 2008 financial crisis on their families. They have also witnessed their parents and older siblings navigating student loan debt and a volatile job market. As a result, Gen Z individuals tend to approach life decisions with a cautious mindset. However, it is important to note that Gen Z is a generation known for their ambition and determination. They have an entrepreneurial spirit. A strong desire for stability. According to a recent survey conducted by Chase2, homeownership holds an important place in the dreams of nearly 90% of Generation Z individuals. This unwavering aspiration for owning a home and increasing purchasing power establishes Generation Z as a significant influence in the real estate market. Market to each generation where they are most comfortable, for Y and Z it is online and on the go To get the attention of these younger generations, mortgage lenders must understand that for these groups, digital technology is the norm, integrated into all aspects of their lives. They rely heavily on social media, online reviews, and mobile apps for research and communication. Therefore, it is crucial for lenders to implement a marketing strategy that encompasses social media platforms and personalized email, and, increasingly, text communications, to resonate with the tech savvy nature of these generations. That said, there is nuance in every population, and we see this when observing communication preferences across generations. We know, for example, that first-time homebuyers are considerably more likely than the general public to respond to e-mail offers. Understanding communication preferences for each prospect is important for tailoring your omni-channel marketing approach. Growing up in a world where technology is constantly advancing, Generations Y and Z are accustomed to having immediate access to information and services at their fingertips. As a result, they expect an efficient mortgage lending process that uses online, smartphone-enabled tools and platforms. They count on the ability to complete applications and paperwork online, receive updates and notifications via email or text, and have access to resources and tools to track and manage their mortgage journey. Lenders embracing these realities about Gen Y and Gen Z and connecting with them where they are, will be better positioned to serve this demographic and grow their own business. For more information about the lending possibilities for first-time homebuyers, download our latest white paper. Download white paper 1 “Bank of America’s 2023 Homebuyer Insights Report Explores How Hopeful Buyers are Forging Ahead,” bankofamerica.com.  2 “Millennial and Gen Z Adults Still See American Dream Within Reach Despite Challenges,” chase.com.  

In the previous episode of “The Chrisman Commentary” podcast, Joy Mina, Director of Product Commercialization at Experian, talked about the benefits of a waterfall strategy for income and employment verification. In the latest episode, Joy explores common misconceptions around verifications, such as how a lender needs to put a provider with the most records first in their waterfall. "While that might feel like a sure-fire way to cut costs, it isn't necessarily the most effective," said Joy. "Instead of comparing records, I would really encourage lenders to focus on a provider's total cost to verify a consumer." Listen to the full episode to learn about more misconceptions associated with verifications and what you can do to enhance your strategies. Listen to podcast  Learn more

Current economic conditions present genuine challenges for mortgage lenders. In this environment, first-time homebuyers offer exciting, perhaps unexpected, business growth potential. Market uncertainties have kept potential borrowers anxious and on the sidelines. The Federal Reserve's recent announcement that interest rates will remain steady for now has added to borrower anxiety. First-time homebuyers are no exception. They are concerned about the “right” time to jump in, buy a home, and own a mortgage. Despite worries over high interest rates and low inventory, many first-time homebuyers are tired of waiting for rates to drop and inventory to blossom. First-time buyers are eager to explore all avenues necessary to achieve homeownership. They show a willingness to be flexible when it comes to finding a house, considering options like a fixer upper or expanding their search to more affordable locations. The desire to escape the uncertainty and financial burden of renting is a strong driving force for first-time buyers. They see homeownership as a way to establish stability and build equity for their future. Despite the obstacles renters face in the competitive housing market, these potential buyers are motivated. Lenders who take time to understand who these buyers are and what matters to them will be ahead of the game. Notwithstanding stubbornly high interest rates, first-time homebuyers historically have shown remarkable resilience amid market fluctuations. According to a recent deep dive by Experian Mortgage experts into the buying patterns of first-time homebuyers, this group made 35-48% of all new purchases and 8-12% of all refinances between July 2022 and September 2023. First-time buyers represent both immediate potential and long-term client opportunities. How can lenders attract first-time homebuyers and drive growth from this market? The first-time homebuyer market largely consists of individuals in their early 40s and younger, also known as Gen Y and Gen Z. Rising costs of renting a home frustrate these individuals who are trying to save money for a down payment on a house and ultimately, buy their dream home. They want to settle down and look ahead to the future. For mortgage lenders who focus on understanding this younger first-time buyer market and developing targeted business strategies to attract them, great growth potential exists. Often, younger people feel locked out of buying opportunities, which creates uncertainty and apprehension about entering the market. This presents mortgage industry professionals with an incredible opportunity to show their value and grow their client base. To attract this market segment, lenders must adapt. Lenders must develop a comprehensive picture of this younger generation. Who are they? How do they shop? Where do they want to live? What is their financial situation? What are their financial and personal goals?  Acknowledging difficulties in the housing market and showing them a well-conceived path forward to home ownership will win the day for the lender and the buyer. As interest rates are poised to decrease in 2024-2025, there is potential for a surge in demand from first-time homebuyers. Lenders should prepare for these potential buyers, now. It is crucial to reevaluate how to approach first-time buyers to identify new opportunities for expansion. Experian Mortgage examined first-time homebuyer trends to pinpoint prospects with good credit and provide analysis on potential areas of opportunity. For more information about the lending possibilities for first-time homebuyers, download our white paper. Download white paper

In an era where record-breaking home prices and skyrocketing interest rates define the mortgage landscape, borrowers find themselves sidelined by prohibitive costs. With the purchase market at a standstill, mortgage lenders are grappling with how to sustain and grow their businesses. Navigating these turbulent waters requires innovative solutions that address the current market dynamics and pave the way for a more resilient and adaptive future.    Today, I’m sitting down with Ivan Ahmed, Director of Product Management for Experian’s Property Data solutions, to learn more about Experian’s Residential Property Attributes™, a new and exciting dataset that can significantly enhance mortgage marketing and mortgage lead generation strategies and drive business growth for lenders, particularly during these challenging times.    Question 1: Ivan, can you provide a brief overview of Residential Property Attributes and its relevance in today’s mortgage lending landscape?   Answer 1: Absolutely. Residential Property Attributes is our latest product innovation designed to revolutionize how mortgage lenders approach marketing and growth decisions. It’s a robust dataset containing nearly 300 attributes that seamlessly integrates borrower property and tradeline information, providing a more holistic view of a borrower’s financial situation. This powerful dataset empowers lenders to make well-informed, impactful marketing decisions by refining campaign segmentation and targeting. Our attributes group into five categories:  Question 2: As a data-focused company, we frequently discuss the importance of leveraging data and analytics to enhance marketing performance with clients. Considering other data providers that offer property data analytics or credit behavior data, what makes our capabilities distinct?  Answer 2: The defining feature of Residential Property Attributes is its integration with borrower tradeline data. Many lenders today focus primarily on credit behavior, but we consider property data analytics, a critical aspect, equally important. By merging these two components, we present lenders with a thorough and accurate understanding of their target borrowers. This combination is revolutionary for marketing leaders looking to boost campaign performance and return on investment (ROI).  Consider this scenario: On paper, two borrowers may seem homogenous, with similar credit scores, payment histories, and debt-to-income ratios. However, when you incorporate property-level insights, a striking disparity in their overall financial situations emerges. This level of insight prevents possible misdirection in marketing efforts.  Question 3: Could you share more about the practical benefits of Residential Property Attributes, especially regarding enhancing marketing performance?  Answer 3: Residential Property Attributes is instrumental in amplifying performance. It enables precise audience segmentation, allowing lenders to tailor marketing campaigns to address specific borrower needs. Here are a few examples:  Lenders can identify borrowers with over $100k in tappable equity and high-interest personal loans and credit card debt. These borrowers are ideal for a cash-out refinance campaign aimed at debt consolidation. They can use a similar approach for Home Equity Line of Credit (HELOC) or Reverse Mortgage campaigns.  Another instance is the utilization of property listings data. This identifies borrowers who are actively selling their properties and may need a new mortgage loan. This insight, coupled with credit-based 'in the market' propensity scores, enables lenders to pinpoint highly motivated borrowers. Such personalization improves engagement and enhances the borrower experience. The result is a marketing campaign that resonates with the audience, thus yielding higher response rates and conversions. The integrated view provided by Residential Property Attributes is the secret ingredient enabling lenders to maximize ROI by optimizing their marketing journey at every step.  Taking action  As we traverse today's complex mortgage landscape, it's clear that conventional methods fall short. As we face unprecedented challenges, adopting a holistic view of borrowers via Residential Property Attributes is not an option but a necessity. It's more than a tool; it's a compass guiding lenders towards more informed, resilient, and successful futures in the ever-changing world of mortgage lending.  Learn more about Residential Property Attributes

Signing new residents is not just about offering the right apartment home at the right price. Granted, that's obviously a huge part of the equation, but operators also need to provide prospective residents with a seamless shopping and leasing experience. If potential renters encounter any friction or hardships during this time, they are likely to take their home search elsewhere. Today's prospective renters want to be able to tour and gather information about apartments on their own time, and they want a quick "yes" or "no" after completing their lease application. With that in mind, automated income and employment verification - among other tools and solutions like self-guided and virtual tools, chatbots, and automated form fills, is one of the main features and technologies operators should consider implementing if they haven't already done so, to ensure we are meeting the renter where they are. Automated verification of identity, income, assets and employment For leasing managers, automated technology eliminates the need to manually collect the documents required to verify a prospect's self-reported information, which can be a tremendously time-consuming task that extends the overall leasing timeline and increases the exposure due to unoccupied units. Automated verification also reduces the opportunity for bad-faith applicants to submit fraudulent documents related to their financials or employment history. The best part about verification is the variety of options available; leasing managers can pick and choose verification options which meet their needs without breaking the tenant screening budget. Experian has multiple verification solutions and use cases to compare which one may work best for your community. The Experian difference To learn more about our suite of rental property solutions and ways we support the tenant screening process with data-driven insights, and verifications, please visit us at  www.experian.com/rental. This article was originally published on MFI. Read more on MFI for a detailed look at additional tools and technologies operators should consider. 

In today’s age, where speed and convenience are paramount, lenders must transform their digital income verification experience to meet customer expectations. Leveraging the benefits of instant verification is crucial to delivering a seamless experience. However, there are situations where instant verification may not be available or unable to verify customers. This is where the value of incorporating user-permissioned verification into your workflow becomes evident.   Let’s explore the advantages of using a combination of instant and permissioned verification and how they can synergistically enhance coverage, reduce costs, improve efficiency, and deliver an exceptional customer experience.  Instant verification: The epitome of efficiency and experience  Instant verification technology enables lenders to access real-time customer data, making it the pinnacle of verification efficiency. Its ability to deliver immediate insights facilitates quick decision-making, ensuring a seamless and frictionless experience for lenders and customers. There are several benefits to streamlining your verification process, including:   Speed and efficiency: Eliminate the time-consuming process of manually gathering and analyzing data to expedite loan approvals and reduce customer waiting times.  Enhanced user experience: With real-time results, customers can complete their applications quickly and effortlessly, leading to increased satisfaction and higher conversion rates.  Reduced risk: Assess applicant information promptly, maintaining the security and integrity of lending processes.  Permissioned verification: Expanding coverage and engaging customers  While instant verification technology offers numerous advantages, it may not always be available or suitable for every customer. This is where permissioned verification plays a vital role. By integrating permissioned verification into the verification workflow, lenders can expand coverage and keep customers engaged in a digital channel, reducing abandonment rates. The benefits of leveraging permissioned verification include:  Convenience and speed: By granting permissioned access, customers avoid the hassle of uploading or submitting documents manually. This saves time and effort, resulting in a faster verification process.  Increased coverage and reduced abandonment: Permissioned verification ensures a higher coverage rate by minimizing the potential for customer abandonment during the application process. Since the information is retrieved seamlessly, customers are more likely to complete the application without frustration.  Privacy and control: Customers retain control over their data by explicitly granting permission for access. This enhances transparency and empowers individuals to manage their financial information securely.  Creating a verification "waterfall" for optimal results  To harness the combined power of instant and permissioned verification, lenders can establish a verification "waterfall" approach. This approach involves a cascading verification process where instant verification is the first step, followed by permissioned verification if instant verification is not available or unable to verify the customer.                                              Example of Experian Verify’s automated verification waterfall.  There are numerous advantages to adopting a “waterfall” approach, including:   Cost efficiency: Lenders who prioritize instant verification save on operational costs associated with manual verification processes. The seamless transition to permissioned verification reduces the need for manual intervention, minimizing expenses and improving efficiency.  Improved verification success rate: A verification waterfall ensures that alternative verification methods are readily available if the initial instant verification is unsuccessful. This increases the overall success rate of verifying customer data and reduces the likelihood of losing potential borrowers.  Enhanced customer experience: The combination of instant and permissioned verification creates a streamlined and frictionless customer experience. Customers can progress seamlessly through the verification process, reducing frustration and increasing satisfaction levels.  Propelling your business forward  In the dynamic landscape of lending, a combination of instant and permissioned verification technologies provides significant value to lenders and customers. While instant verification delivers unparalleled efficiency and experience, incorporating permissioned verification ensures expanded coverage, reduced abandonment rates, and a seamless digital journey for customers. By implementing a verification "waterfall" approach, lenders can optimize verification processes, reduce costs, improve efficiency, and ultimately deliver an exceptional customer experience.  Learn more about our solutions The advantages of instant and permissioned verification *This article leverages/includes content created by an AI language model and is intended to provide general information.

As 2023 unfolds, rental housing owners and operators find themselves faced with a slightly different market than in the recent past. While rents are still high, rent growth has slowed somewhat, and the prospect of a cooler U.S. economy means more renters could be facing economic hardships in the months ahead. So, who is today's renter? In The State of the U.S. Rental Housing Market, a new report from Experian, we uncover that today’s renters are typically younger. According to our data derived from Experian RentBureau® and our analysis, 68.8% of today’s renters are either millennials (41.8%) or Gen Z (27%). Meanwhile, 17.3% are Gen X, 11.9% are baby boomers and only 2.2% are from the Silent Generation. Similarly, when you look at the renters who have a higher propensity to move — and thus need a new apartment or home to rent — they tend to skew younger. Our analysis shows that, of the renters who made two or more moves during the last two years, 43.2% were Gen Y (millennials). The younger Gen Y segment accounts for 25.2% of the frequent movers. As the population of renters has increased over the past decade, the concentration of growth appears to be among households earning $75,000 or more in annual income. About 7.6 million of these households were renters in 2009; by 10 years later, that figure had increased to 11.2 million. What is their financial status? Also, by some measurements, U.S. consumers — and, by extension, renters — improved their financial standing during the pandemic era. Credit scores rose as consumers used stimulus payments to pay down debt and save, but this trend is starting to normalize. The median conventional credit score rose above 700 in 2022, up from just above 680 in 2019. Still, according to Experian RentBureau, 63% of all renter households are low- to moderate-income earners, meaning they make less than 80% of the area median income. Furthermore, the average renter spends 38.6% of their income on rent. Households that spend more than 30% of their income on housing costs — including rent or mortgage payments, utilities and other fees — are considered “housing cost burdened” by the U.S. Department of Housing and Urban Development. For more insight and analysis of today’s rental-housing market, click here to download your free copy of The State of the U.S. Rental Housing Market report.

After a period of historic, double-digit rent growth and razor-thin vacancy rates, the rental housing market has shown some signs of softening in recent months. And economic uncertainty still looms. The potential of a downturn this year and the existing economic strains faced by large swaths of renters may impact many rental-housing owners and managers nervous about their ability to find renters who can fulfill their lease terms. In The State of the U.S. Rental Housing Market, a new report from Experian, our data scientists and analysts offer key insights into the U.S. housing market and its impact on renters. The analysis in this report is derived from synthesizing various data samples and sources, including Experian credit attributes and models as well as data from the U.S. Census Bureau and Experian RentBureau®. Experian RentBureau is the largest rental payment database and contains over 4.4 million transactions and more than 25 million renter profiles. This report yields three major takeaways: Soaring interest rates and a slowing mortgage sector over the last year have taken heat out of the homebuying market, leading to more renters remaining in the renter pool. Inflation and other economic strains continue to squeeze renters’ finances. As rent prices increase and negative payment activity becomes more frequent, rental-housing owners and operators are striving to grow without expanding default risk and need to find renters with the best chances of fulfilling the terms of their leases. Among the report’s other notable findings: The average renter spends 38.6% of their income on rent. Households that spend more than 30% of their income on housing costs — including rent or mortgage payments, utilities and other fees — are considered “housing cost burdened” by the U.S. Department of Housing and Urban Development. Experian data shows 28% of renters with negative payment activity in 2022 (negative payment activity is defined as having late charges, insufficient funds, write-offs or outstanding balances). The figure represented an increase of 5.7 percentage points from 2021 and 3.8 percentage points from 2020. Also of note, low-to-moderate income renters are twice as likely to have a negative payment activity compared to other renters. Rent-to-income ratios are highest in the West and the Northeast. Among all 50 states, the leaders are Washington D.C. (40.9%), California (39.7%), Washington state (35.6%), Utah (35.6%) and New York (35.3%). Keep pace with trends in future blog posts that will dive deeper into the current conditions affecting the rental housing market and renters. In the meantime, click here to download your free copy of The State of the U.S. Rental Housing Market Report in full.

High property values and rising interest rates have priced many borrowers out of the market. In the face of declining home purchases, lenders are focusing on their portfolios and opportunities to expand borrower relationships. At the same time, portfolio health is increasingly important. Keeping a pulse on and successfully managing portfolio risk is just as important as portfolio growth. To effectively manage a mortgage portfolio, an understanding of the complete financial standing of a borrower, along with the most recent loan performance and property data characteristics, is crucial. Below we discuss three ways to analyze your portfolio to maximize performance. Portfolio risk While mortgage delinquencies remain well below pre-pandemic levels, rolling delinquency rates are seeing an uptick. In a recent study, we found that, of the at-risk population, over 24% may be at high risk of delinquency or default. Having the tools and resources to segment your portfolio and identify these borrowers is key to preemptively assisting or modifying loan terms and reducing risk exposure to the business. Growth and retention Did you know up to 64% of prime and above borrows may be ideal Home Equity Line of Credit (HELOC) candidates? Having the ability to segment your portfolio to identify borrowers who can tap into their home equity as a line of credit for upgrades, remodeling, or simply a rainy-day fund, will allow you to grow your originations pipeline while also supporting your mortgage retention strategy. To optimize your segmentation strategy, consider leveraging In the Market Models (ITMM) to identify borrowers with a high propensity to respond to HELOC offers. Through a retrospective analysis, we found that ITMM can improve campaign performance by over 700%. Similarly, a HELOC can be a prime option for borrowers with increasing debt. Through our newly launched solution, Mortgage Insights Dashboard for Servicing, we found that up to 46% of prime and above borrowers may be ideal candidates for debt consolidation. For this segment of your portfolio, a HELOC can consolidate high-interest debt from credit cards, retail cards, or even short-term loans. Peer analysis Like sports teams, many mortgage lenders and servicers are interested in comparing their performance against that of their peers. Are your portfolio runoff rates above, equal to, or below that of your competitors? In some instances, we’ve seen a lender’s runoff rate averaging 10% MoM higher than their peers. By comparing your portfolio performance against your peers (and the market) you can assess both the efficacy of portfolio recapture strategies and demonstrate loan quality to investors. While these are just a few examples of ways to analyze your portfolio, perhaps what’s most important is having the data, such as credit, income, DTI, and property information, needed for this type of intelligence available in one place. Partner with a provider that can offer you the mortgage servicing solutions to easily segment your portfolio to gain insights and inform ongoing strategic decisions. Learn more *Data charts source: Experian's Mortgage Insights Dashboard for Servicing

In recent blog posts, we’ve discussed growing in a down market and getting ahead with a proactive outreach and engagement strategy. In this article, we’ll focus on audience segmentation and multichannel marketing. As the market has shifted, effective cost management is a top priority. Lenders who get the most bang for their buck tend to use data to create their audience, segment and message. Best practice #1: audience segmentation It’s hard to beat the combination of credit and property data for mortgage lenders. Obtaining a holistic consumer view and property details (if they’re a homeowner), can help lenders determine the best mortgage product and refine their messaging. Many of our partners have great success leveraging a combination of property and credit insights to identify consumers for a home equity line of credit (HELOC) or new first mortgages. Let’s look at HELOC as an example. From a process perspective, we use property data to identify borrowers with properties that qualify for the lender’s HELOC program – sufficient equity, owner occupied, no tax liens, not listed for sale, a value below their upper lending bound, etc. Once the initial population is identified, we further segment their target population by adding key credit insights, such as current score and outstanding unsecured debt. This allows the lender to identify borrowers who qualify for their HELOC program and do specific outreach for either debt consolidation or remodel. By performing the equity and credit analytics with a single vendor, the lender can increase their speed to market.  The results? Lenders succeed by quickly reaching the right borrowers, with the right offer and message. Additionally, they don’t waste money on or disappoint applicants who don’t meet their program guidelines. Best practice #2: refining the message The next best practice I’d like to focus on is refining the message with relevant demographic and consumer behavior data. Experian studied the differences among consumers who recently purchased a home, those who recently secured a HELOC, and the general consumer population.   Look at these four categories from our Mosaic Group and consider how you would adjust your messaging if you really know your prospect? Might you incorporate different imaging for a Power Elite homeowner in your HELOC campaign than a Flourishing Family to whom you are marketing a first mortgage?   Or consider how different decision-making styles would impact the information you highlight in your outreach?  Look at the difference between HELOC borrowers and first mortgage borrowers in terms of their decision-making style. Different messaging will appeal to a consumer who is a brand loyalist versus someone who is a savvy researcher.  Best practice #3: omnichannel marketing strategy Finally, let’s focus on how best to reach the consumer. Not only is it important to meet consumers on their preferred channel, but a best practice is to execute an omnichannel strategy. We increasingly see lenders using emails in prescreen campaigns with invitations to apply, or ITAs, across multiple communication channels.  Look at the overall research for email, text, and direct mail. Increasingly, savvy marketers are asking us for emails in their prescreen campaigns, and it’s no surprise. Based on the research, a tailored email campaign can be very effective. Perhaps most surprising is the level of mortgage borrower engagement in streaming TV! This is just the tip of the iceberg in terms of how data can be sliced and diced to drive your omnichannel engagement strategy. In short, when executing a mortgage marketing campaign, it’s important to leverage available data for audience segmentation. Once your audience is identified, you’ll want to refine your message to resonate with each segment. Lastly, instituting a multichannel marketing strategy is key to ensuring you’re getting in front of your audience in the channel they’re most likely to engage. By adopting these best practices, you’ll reach the right borrower, with the right message, in the right channel, which, in-turn, will help boost the ROI of your marketing program.  To learn about Experian Mortgage solution offerings, click here. Learn more

Driving growth in a down mortgage market can be tricky. It’s a mad scramble to obtain quality mortgage leads that convert into profitable loans. At Experian Mortgage, we have a front row seat into the efficacy of different lead generation strategies, and what we know for certain, is that data matters in both the audience creation and outreach approach. I’ve compiled several best practices for identifying qualified prospects early in the homebuying journey and using analytics to focus your outreach on those most likely to convert. Best practice #1: credit-based triggers First, let’s focus on borrower-behavior triggers, as they’re key for getting ahead of the competition. I occasionally hear skepticism about tried-and-true credit-based prospect triggers, but many find them indispensable. Credit triggers alert you when borrowers apply for credit and when other indicators meet your specific lending criteria, including credit scores, score trends, credit limits, utilization and much more.  They’re effective – and not just for big lenders. Our clients leverage credit-based triggers to quickly pursue “hot leads,” and have reported higher response rates, lower acquisition costs and revenue growth. Best practice #2: property listing triggers Another borrower behavior to watch is listing a property for sale, which can be done using property listing triggers. You can use listing triggers to monitor current customers – and with Experian, you can prospect for new customers outside your portfolio. One of our clients instituted property listing triggers and immediately identified 40,000 homeowners in their footprint who had recently listed a property for sale. Experian research shows that a homeowner lists their property for sale, on average, 35 days before applying for a new mortgage. This means this lender had over a month to reach those consumers with a tailored message. Now that’s getting a jump on the competition! But what about those homeowners who list a property for sale but don’t move? We hear anecdotally about more homeowners putting their homes on the market to see what offers they can get. According to recent data, a higher percentage of listings fail to sell today than last year. While property listing remains one of the most predictive behaviors for purchase, there’s room to optimize. Whether your prospect came to you via a property or credit trigger, there’s an opportunity to improve your ROI by identifying trigger leads most likely to convert. Best practice #3: in-the-market models A key best practice in audience segmentation is to incorporate in-the-market models (ITMM). A good model is based on sophisticated analytics across hundreds of data elements and millions of loan applications. Additionally, a good model is tailored to your product. A consumer in the market to buy their first house will “look” very different than a consumer in the market for a Home Equity Line of Credit (HELOC). Experian clients are doing two impactful things with ITMM. First, they create their audience list by bundling ITMM with credit, income, and property data to identify qualified consumers likely to be in the market soon. Second, they optimize an existing marketing list. However, when it comes to a mortgage lead generation program, you can only optimize what you measure. Experian has been helping clients by analyzing their lost leads and lost loans. Several clients recently asked us to analyze their efficacy with marketing lists originating from digital mortgage lead aggregators (i.e., lists of consumers who sought information online about mortgages). I’ll focus here on the leads who did NOT originate a mortgage with our clients, but DID open a tradeline with someone else. My first observation is that prospects who opened a tradeline were significantly more likely to open a credit card than a mortgage. My second observation is when the prospect opened a mortgage loan with a different institution, 80% of the time that lender was a non-bank. This is higher than the current non-bank share of the market, which indicates non-banks are aggressive with their leads and poised to grow their share. Here’s where ITMM comes into play. By incorporating an ITMM specifically for your product – HELOC, purchase, refinance – you can focus attention on borrowers most likely to open a mortgage. In summary, instituting credit and property triggers is a critical best practice and will open the door to a plethora of prospects. If you want to level up your marketing strategy, incorporating an ITMM is key and will help you segment the trigger leads and home in on those that are most likely to convert. Be sure to check out the final blog post in this series, Lead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy. To learn about Experian Mortgage solution offerings, click here. Learn more

Today’s mortgage market is challenging. Mortgage lenders and servicers will need to focus on product expansion to continue to grow their business. In a recent Q&A session, Susan Allen, Head of Product for Experian Mortgage, shared best practices for leveraging data for profitable growth.Q: At a high level, how can mortgage lenders and servicers grow their businesses?A: There are a lot of options to increase pipeline. One best practice we’re seeing now is to consider expanding both your product suite and your footprint. Very few lenders offer a comprehensive set of solutions in a national footprint. But demand is strong for solutions that go beyond traditional 30-year fixed-rate mortgages, including options to tap home equity. These types of products can help you grow your business by exposing you to new borrowers and broadening your relationships with clients. For example, we see several clients, even non-banks, venturing into credit cards and personal loans to meet their customers’ broader financial needs.Q: You mentioned demand for home equity solutions is strong. What should lenders consider when it comes to home equity loan growth strategies?A: The current record level of untapped equity makes home equity lines of credit (HELOCs) attractive for borrowers to use for debt consolidation, remodeling or to add to their rainy-day fund. For lenders to decide whether HELOCs would be profitable for their business, they should look broadly at data about borrowers, volumes and indicators of profitability, such as credit lines and utilization.Q: It’s one thing to talk about the HELOC market, but does Experian have any home equity data to show what’s happening in this space?A: Absolutely. We’re seeing several things when it comes to home equity data. First, HELOC volumes have doubled since January 2021, which indicates strong borrower interest. Second, we know that home prices are at record highs across the board, and we see this record of “tappable” equity translating into credit lines well over $100,000. What’s more, we’re seeing borrowers drawing down consistently at $37,000 on average, which is a healthy and profitable utilization rate. Lastly, greater than 90% of HELOC borrowers have a prime or super prime credit score. Our data shows HELOC borrowers have higher credit scores than new purchase borrowers. Additionally, conventional wisdom says that HELOCs are for seasoned homeowners, but according to the data, the younger generation of homeowners has tripled their HELOC originations. I’ve been in this industry for a long time, and to be honest, this shocked me. This makes it clear that it’s always important (especially for industry veterans) to constantly update our understanding of current market dynamics. Q: Wow, it sounds like expansion into home equity solutions is a no-brainer. What am I missing? A: HELOCs are a strong and growing market segment. But it’s not sufficient to look only at opportunity. We must also use the best data at our disposal to evaluate risk. With HELOC performance impacted by property values, recent concern over the stability of home prices is causing some lenders to pause. Clients tell us they would like to expand their HELOC offerings but aren’t sure when or where to start. Q: So, what’s the answer here?A: Data is key to taking the guesswork out of decisions. When it comes to HELOC expansion, lenders voice concern specifically about home price forecasts. Although it is notoriously hard to forecast home prices, you can use actual, current data to inform decisions about where and when to expand a home equity portfolio. For example, lenders can use listing data to gauge markets shifting from a “seller’s market” to a “buyer’s market.”Q: Susan, this has been a great discussion. Any final thoughts? A: As I’ve shared, great opportunities exist. With best-in-class data and analytics, lenders can find these opportunities and propel their businesses forward. Be sure to read the other blog posts in this series:Getting Ahead with a Proactive Mortgage Outreach and Engagement StrategyLead Conversion Through Tailored Messaging and a Multichannel Mortgage Marketing Strategy To learn about Experian Mortgage solution offerings, click here.