Sales Boomerang reports on Q3 2021 mortgage market opportunities

Several “fertile opportunities” are available despite market-wide declines in loan volume, the company stated in a release. These include a high frequency of borrowers who are well positioned to refinance for a better rate, remove FHA (Federal Housing Administration) mortgage insurance, or tap into home equity.

“The Mortgage Market Opportunities Report draws on Sales Boomerang system data to identify market opportunities of relevance to today’s borrowers and lenders,” the company stated. “To generate the report, Sales Boomerang reviewed data from more than 150 residential mortgage lenders that use its borrower intelligence and retention tools to monitor millions of customer and prospect records.

“Sales Boomerang then calculated the aggregate frequency with which those contact records triggered loan-opportunity, prescriptive-scenario and risk-and-retention alerts during the second and third quarters of 2021.”

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. Sales Boomerang includes the frequency of each alert type in the third quarter of 2021 across a sample group and compares it to the prior quarter. Those include:

• Mortgage Inquiry Alert, where a customer or prospect has shopped with a competitor in the last 24 hours, seen in 5.27 percent of monitored contacts, down 10.22 percent from the previous quarter.
• EPO Alert, where a customer or prospect whose loan closed within the last six months has shopped with a competitor in the last 24 hours, seen in 2.23 percent of monitored contacts, down 8.23 percent from the second quarter.
• Credit Improvement Alert, which occurs when a customer or prospect has improved their FICO score, seen in 1.32 percent of monitored contacts, down 40 percent.
• New Listing Alert, where a customer or prospect has listed their home for sale, seen in 1.04 percent of monitored contacts, down from 24.09 percent.
• Equity Alert, which occurs when a customer or prospect’s home equity has increased, seen in 8.02 percent of monitored contacts, down 6.2 percent.
• Rate Alert, occurring when the interest rate of a customer or prospect’s existing mortgage is significantly higher than current prevailing rates, seen in 6.96 percent of monitored contacts down 47.79 percent.

“As industry experts have predicted, we are starting to see the refinance market slow – and the purchase market has not yet picked up the slack,” Sales Boomerang CEO Alex Kutsishin said. “Still, the big-picture view says we are still in the midst of a housing boom. Ample purchase and refinance opportunities remain, and our data intelligence points to myriad ways lenders can improve borrowers’ financial position with the right loan product.”

In addition to the alert statistics above, the MMOR contains prescriptive-scenario alerts, which analyzes not only whether a consumer could benefit from a given loan type, but also whether the consumer is credit-qualified to apply for financing. The frequency of each of these alerts was:

• Cash-Out Alert, where a borrower is credit qualified and has built sufficient equity to tap into the cash in their home, seen in 4.31 percent of monitored contacts, up 291.82 percent from the second quarter.
• Rate-and-Term Alert, occurring when a borrower is credit qualified and can benefit from the current interest rates for a refinance, seen in 3.86 percent of monitored contacts, up 34.49 percent from the previous quarter.
• Debt Alert: where a borrower is credit qualified and can benefit from paying off other debts with the equity in their home, seen in 1.73 percent of monitored contacts, up 10.19 percent from the second quarter.
• FHA MI Removal Alert, which occurs when an FHA borrower has exceeded 20 percent equity and can remove mortgage insurance, seen in 7.27 percent of monitored contacts, up 366.03 percent.

For lenders that maintain servicing portfolios, the frequency of risk-and-retention alerts was 36.18 percent of monitored contacts, down 1.23 percent from the prior quarter. This alert occurs when a customer is engaging in one or more of 15 credit activities that may put their serviced loan at risk.

The report also contained an analysis by Sales Boomerang. Observation of this data showed many FHA borrowers with mortgage insurance are unaware they have the option to remove it once they reach 20 percent equity. With a 366 percent quarter-over-quarter increase in the MI removal alerts, lenders can notify borrowers of potential instant savings.

It also showed even though the frequency of equity alerts decreased slightly quarter-over-quarter, nearly one in 12 borrowers saw significant home equity growth in the third quarter.

“Moreover, the almost 300 percent quarter-over-quarter increase in cash-out alerts shows that borrowers have grown their credit scores alongside their equity, paving the way for more cash-out refinance and HELOC activity in the coming months,” the company stated. “The strong performance of equity-based alerts is underscored by key observations from the latest CoreLogic Homeowner Equity Report, which found that the average homeowner gained $51,500 in equity during the past year while U.S. homeowners as a whole have seen their equity increase by a total of nearly $2.9 trillion since the second quarter of 2020.”

The quarterly growth from the rate and term alert revealed so long as interest rates remain low, refi opportunities remain on the table for many borrowers. However, Sales Boomerang stated, the quarter-over-quarter decreases in mortgage inquiry and EPO alerts indicated lenders will need to be proactive in reaching out to refi customers, as many eligible ones do not appear to be shopping for rates on their own. The decrease in new listing alerts also suggests lenders might need to revise their year-end revenue forecasts.