Communicating with borrowers online and generating Internet leads may be the future of reverse mortgage originations, and some lenders are already starting to target the growing online market.
One day, they say, online will replace television for reverse mortgage leads.
But there are some distinct differences between the online borrower and the kitchen table borrower, one lender on a panel of reverse mortgage executives shared at a May National Reverse Mortgage Lenders Association conference held in Irvine, California.
Census data indicates the 65-plus age group is increasingly using the Internet regularly. The percentage is around 40% for that age group, and is nearly double that for the age 50-64 demographic.
That trend is only going to get stronger, says Reza Jahangiri, American Advisors Group CEO.
“We are seeing 62 to 65 year olds are the largest lead group online,” Jahangiri said before conference attendees. “But they are converting by far the worst from lead to fund.”
AAG has more than doubled its retail business year over year, and has closed 944 loans to date in 2012, according to data from Reverse Market Insight. In addition to online efforts, AAG works with former Senator Fred Thompson as its spokesman appearing in TV ads.
Shifting to online, the company’s research on its online leads shows two things, Jahangiri says.
“First, the borrowers with less need may still be working and may have more substantial savings. Typically, when the borrower has a greater need they convert at a higher rate,” he says.
The leads convert much faster when they’re generated online, he notes, by about two weeks. But, AAG has found, a borrower who contacts a lender online is likely shopping around.
“Someone who finds you on the Web is quick to find your competitors as well, so you’re dealing with a more price-sensitive borrower rather than someone who is proceeds-sensitive.”
Even if the person is not immediately in the market, follow up is still important. AAG says following up with mail or email is essential, with Web leads proving to be largely faster in terms of conversion and requiring quick, immediate attention.
“It might not be the right time for the person right now, but life circumstances could change that, so it’s a critical way to gain efficiency.”
Lenders must go where the borrower is seeking information, he says.
“We have made Web the No. 1 priority for marketing in the future,” Jahangiri said. “If you have a retail platform, you need to be learning right now and getting active. It is going to be the primary growth source for direct response leads and it will trump television eventually. The numbers don’t lie.”
Written by Elizabeth Ecker