Reaching some ethnic groups is a potential gold mine for originators. However, one of the top U.S. mortgage economists says traditional forms of communication must be replaced with more unconventional media.
During an interview about the mortgage market with Doug Duncan, the chief economist for the Mortgage Bankers Association of America, he pointed to a 1998 study that revealed roughly a third of prospective borrowers do not compare competitive quotes when shopping for a mortgage. "Thirty-one percent of people never talk to more than one" contact during the home buying process, he said.
That is a pretty powerful position for a loan originator to play from. So how does one become so prominently placed?
But not the traditional channels of communication.
Duncan, who was attending the group's annual servicing conference in San Diego, Calif., noted that the study was conducted to determine what communication channels are used by different ethnic groups. "You need to understand how people communicate."
The survey of 1000 borrowers showed that "Hispanics were more than twice as likely as any other racial or ethnic subgroup to get their primary information from family," the Washington D.C.-based economist said. "The family institution is very important in the transmission of information about where to get your mortgage."
Mortgage banker Wells Fargo Home Mortgage is capitalizing on the Hispanic market -- recently announcing its plans to add 100 loan consultants in Los Angeles. The company said the area is the fastest growing market in which it operates, and Hispanics make up around half of it. Wells noted that this growth has been fueled by its decision to accept the Mexican matricula card as valid identification two years ago.
The study by the Mortgage Bankers indicated that African Americans were not using the newspaper to find mortgage information, Duncan said. "They were likely to get it from housing fairs and from television."
In addition to ethnic groups, communication with different types of family structures should also be analyzed, according to Duncan. He said U.S. census data indicate that single female heads of household with children make up a big share of the population but a small share of homeowners.
Duncan noted how one rental property builder capitalized on this segment by addressing their needs specifically (i.e., attached garages with locking doors; gated community).
The builder reportedly said, "the fastest growing demographic for us is women 35-45 with kids. We can't build them fast enough."
Duncan said the study will be repeated soon.