The Effect of the COVID-19 Crisis on Mortgage Loans and Refinancing
The impact of COVID-19 has been felt across the economy, but we wanted to do a deeper dive into its effects on loans and refinancing in the mortgage industry. There has been anecdotal chatter that interest rates will drop and consumers will take advantage of lower rates to refinance or take out a new home mortgage. But, what do the numbers actually look like?
To access the insights available on loan and mortgage numbers, we’re utilizing Connected Flash Studies. These studies are surveying real-time consumer sentiment across industries in the wake of the coronavirus pandemic and are scaled to the entire U.S. adult online population of 200 million. The screenshots you’ll see below are taken directly from the easy-to-use Ignite Platform.
Consumer Likelihood to Refinance Mortgage
When it comes to consumers’ likelihood to refinance a mortgage, 86.5M (teal) said their likelihood had decreased, 7.6M (red) increased and 90.9M (purple)stayed the same.
Of those who increased, the majority fall within 35 to 64 years old, with the highest percentage in the 45 to 54 age group. 25% have a household income between $25-50K, while $75-100K and $100-150K each represent 17%, for a total of 34%.
Looking at the primary influences on their purchases, 54% indicated price was the primary consideration, while only 10% said convenience is a primary influence. This would align with a group who is willing to go through the slightly inconvenient process of refinancing in order to get a better interest rate and, likely, a better payment (or price) each month.
If you’re a bank interested in targeting those who are currently considering a mortgage refinance, your target audience could be a female between 45 and 54 years old. 56% do not have children under the age of 18.
You’ll find this group spending 20-40 hours online each week. When it comes to media where you could catch their attention, they over index by 16% for Hulu Plus, 58% for the Washington Post and 41% for the Wall Street Journal. This is a group that reads regularly, has an optimistic outlook and strives to maintain a healthy diet. Keep these considerations in mind when assessing where to place ads that could catch their attention.
It could be worth looking into where this group overlaps with the Financial Anxiety group, an audience that we’ve seen is concerned with maintaining financial security and wealth during the coronavirus pandemic.
Consumer Likelihood of Taking Out a New Home Mortgage
When it comes to consumers’ likelihood of taking out a new home mortgage, 46.4M (teal) said their likelihood had decreased, 3.6M (red) increased and 152.8M (purple)stayed the same.
Looking at the increased likelihood group, the bulk of this audience is evenly split with 20% each in the following age segments, 25-34, 35-44 and 45-54, but there is also a significant group of 18-24 years old respondents coming in at 16% of the total. 25% have a household income between $25-50K. 55% are male, 35% are single and 44% have children under the age of 18. They over index by 56% for proving competence and skills, which aligns with the 31% over index for LinkedIn usage.
Given the noteworthy audience at 18-24 years of age, this could be a group that includes a remarkable number of first-time home buyers ready to take advantage of low interest rates and prove their place in the world as adults –– otherwise known as the previously mentioned driver of proving competence and skills. The first-time home buyer persona continues to align as we look at the group that has decreased in likelihood of taking out a home mortgage and see that this group has the largest number, 18%, of 65+ year old respondents.
What Does This Mean for Lenders During the COVID-19 Crisis?
Given what we’ve seen in the audiences looking to refinance and take out a mortgage, these are two distinctly different groups on which to focus communication, engagement and attention.
Those looking to refinance could be consumers who are further into their career, they have owned their home for a period of time and they may be looking to refinance in order to provide further financial security.
The group looking to take out a mortgage could be primarily first-time home buyers who are eager to take advantage of low interest rates and make their first step into the adult world.
Utilize these personas as you speak to those looking to refinance and those looking to buy and create a targeted approach that will hit home with those interested in home loans in 2020.
Want to learn more about consumers during the COVID-19 crisis? Download our just released report: Understanding U.S. Consumer Sentiment During the Coronavirus Pandemic.