Brokers Are First-Timer Magnets

THINK OUTSIDE THE BOX:  Good advice can pay for itself 10-fold. Choose a mortgage expert, not a jack-of-all trades. If you want investing or insurance advice, get a separate referral.

More first-time buyers use brokers than any other mortgage channel, 55% of them to be exact.

It’s hard to overstate the importance of that. It makes brokers extremely important conduits for lenders who want clients that represent long-term revenue—and what lender doesn’t?

That fact was established once again with the release of CMHC’s 2015 First-Time Homebuyers Survey. Here are five other stats brokers need to know from that report:

  1. 73% who went online did so to compare other mortgage products.
    • As a broker or lender, do you have ways to help consumers compare your offerings to others?
  2. 30% of first-time buyers found their lender or broker site through online ads.
    • Mortgage providers seem to be increasingly utilizing banner ads, especially retargeting banners, which have up to 70% higher conversion rates. Overall, less than 1 in 1,000 consumers click banner ads. But posting targeted attention-grabbing ads, “above the fold,” and in relevant media can boost click-through to 1 in 100 or better.
  3. 98% of first-time buyers (FTBs) who received a recommendation to use a specific lender ended up using the lender channel.
    • These recommendations are most likely to come from real estate agents. It’s no surprise then that banks pay real estate brokerages up to 50 bps or more for referrals.
  4. 43% of FTBs arranging their mortgage directly with a lender dealt with someone who exclusively specialized in mortgages.
    • It’s your biggest financial obligation, folks, and good advice can pay for itself 10-fold. Choose a mortgage expert, not a jack-of-all trades. If you want investing or insurance advice, get a separate referral.
  5. Providing advice on long-term mortgage strategies can increase a first-time buyer’s satisfaction with their mortgage professional by up to 85%.
    • This is something very few online mortgage discounters focus on. Providing thoughtful, customized mortgage amortization plans is a differentiator for any originator.

Here are a few more stats of interest from CMHC’s report…

Use of Online Resources

  • 83% of FTBs went online to gather information about mortgage options and features (roughly the same as last year, and likely under-reported).
  • Of first-time mortgage shoppers who went online:
    • 53% visited lender sites, while almost one-third (31%) went to broker sites.
    • 70% used an Internet search engine such as Google when looking for lender or broker sites.
    • 84% used an online mortgage calculator.
    • 37% used different social media platforms to research mortgage information (vs.19% for other mortgage consumers).
  • 26% used a mobile device to find mortgage-related information.
    • In about one-in-five cases, mobile users accessed a mortgage-related app.

Interaction with Mortgage Professionals

  • 42% of repeat buyers reported arranging their mortgage through a mortgage broker.
  • 57% of broker users and 54% of lender customers said the desire to get the best rate or deal had a “great deal” of influence on where they got their mortgage.
  • 79% of those receiving a recommendation to use a specific broker ended up using a broker.
  • 72% of first-time buyers who switched financial institutions arranged their mortgage through a broker.

Buyer Satisfaction

  • Half of first-time buyers who received advice from their mortgage professional reported the advice to be “very useful.”
    • There’s clearly a huge opportunity to better educate new homeowners.
  • 34% of first-time buyers “totally agreed” that they got the best mortgage deal for their needs (vs.47% for repeat buyers).

Survey note: CMHC’s survey interviewed 788 first-time homebuyers from across Canada. Individuals polled had all undertaken a mortgage transaction in the past 12 months and all were one of the prime decision-makers within their household for matters relating to housing finance and mortgages.

Robert McLister      Canadian Mortgage Trends      November 29, 2015

 

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