How to Stay Competitive During Mortgage Rate Fluctuations

By Scott Draeger, SVP of Product Marketing and Vertical Solutions at Smart Communications 

U.S. mortgage rates have been making frequent, yet small shifts throughout the year. According to Bankrate, the rates for a 30-year fixed rate mortgage ranged from 6.84% to 7.39% in the first seven months of 2024. On July 18th, American Banker’s Brad Finkelstein wrote about how falling rates were not spurring sales. One week later, on July 25, he wrote about rising mortgage rates. This coverage is typical in 2024, as experts look at a complex mix of economic data through a variety of lenses during a Presidential election year.  

While U.S. banks have been planning for a variety of interest rate scenarios for several years, consumers focus on mortgage rate fluctuations from a more immediate perspective. Success in this market depends more on watching rates – it's about creating great customer experiences to retain clients and attract new ones.

You Can’t Control Mortgage Rate Fluctuations 

You can monitor mortgage rate changes all day if you like, but that won’t alter them. Hanging a horseshoe or rubbing a lucky rabbit’s foot won’t shift rates either, but you are welcome to try. Rates fluctuate due to a variety of factors that make them tough to predict. Consumer responses to these rates are equally unpredictable.  

At any time, rates can increase, or decrease, and by small or large amounts. These shifts can happen frequently or slowly and factors like consumer sentiment, news reports, or other trends may have an impact. While you can sit and watch rates change all day, it’s how you react that matters. 

Rather than simply observing interest rate fluctuations, it’s essential to have a strategy in place. As rates shift, different areas of your business need to prepare for a variety of tactical responses. If rates drop significantly, you may lose current loans to refinancing. According to Investopedia, consumers are prepared to refinance if a new rate is 1% to 2% lower than their current one.  

Your core systems and CRM systems will tell you exactly which customers fit this profile. These tools can identify customers who are prime for refinancing based on current trends. By being proactive, you can treat these customers as one or many segments depending on a variety of factors, like loan amount and type 
 
However, it’s a delicate balance. Being too proactive by offering lower rate refinance options may leave money on the table by alerting your complacent clients. On the other hand, being too cautious may result in losing customers to competitors who offer better rates, digital interactions, and enhanced customer experiences. 

Act on Key Trigger Points 

If you pay attention, your customers tell you when they are considering alternatives. If traffic suddenly spikes on your website’s mortgage calculator, or they request a payoff amount, they’re telling you something.  If they change their ACH settings, they are telling you something. Most organizations do not connect these events. Does yours? 
 
When a new prospect engages with your online calculators, responds to an advertisement, calls a Loan Originator, or otherwise signals interest, you need to be there with communication, empathy, and rapid responses. 

Proactively Guide Customers Through Mortgage Evaluations with Context and Clarity

When you detect signs that a customer is re-evaluating their mortgage, it’s important to provide context. You may want to position payments relative to their current mortgage, while also reminding of origination fees they might have overlooked. Additionally, you’ll want to highlight how the new term might impact their long-term financial plans. 
 
This is a great opportunity to send them some marketing communications or flag the customer as an opportunity for a Loan Originator in your CRM system. Whether it’s creating an interactive communication, adding them to a marketing campaign, or generating personalized correspondence through Salesforce (Link to our FS Playbook on salesforce site maybe) or your CRM, SmartCOMM™ generates these on-demand and interactive communications at scale.

Streamlining the Mortgage Application Process for Better Customer Retention and Acquisition 

You know shoppers are intimidated by the mortgage application and approval process. It is a rare and major financial transaction for them, and a process that’s subject to regulations unfamiliar to them.