June 26, 2009
After months of plummeting, mortgage and home equity marketing direct mail is finally leveling off, and that may be a good sign for the beleaguered housing market.
Mintel Comperemedia, a provider of direct marketing intelligence, reports that for the past six months — after more than two years of declines — the number of home loan offers sent to consumers has been flat.
From December 2008 to May 2009, lenders sent an average of 38 million direct mailings per month, approximately 31 million for mortgages and 7 million for home equity products.
This steady direct mail volume stands in sharp contrast to trends of the previous three years. As the credit crunch and declining home values dried up the housing market, lenders steadily reduced marketing direct mail. In the first three months of 2009, the total number of mortgage and home equity direct mailings tracked by Mintel was 84 percent lower than the volume seen two years earlier.
The leveling of direct mail may signal the housing market bottom, according to the firm.
"Many experts believe housing is stabilizing, based on indicators such as rising consumer confidence, more housing starts and increased existing home sales in recent months," said Stephen Clifford, vice president of financial services for Mintel Comperemedia. "The leveling off of home loan direct mail is another indicator that America may be reaching the floor of this downturn in the housing market."
Lenders have also dramatically changed their direct mailings to better suit today's market. Reduced home values and an increase in foreclosures have dried up the once-robust home equity market. So unsurprisingly, in the first quarter of 2009, 83 percent of secured loan direct mail offers promoted mortgages only, compared with just 65 percent during the first three months of 2007.
Adjustable rate mortgages (ARMs) have also fallen out of favor in direct mail. Mintel reports that in the January-March 2009 period, only 15 percent of mortgage direct mailings advertised ARMs, down from 38 percent two years earlier.
"Today's direct marketing shows lenders taking a more prudent, conservative approach to mortgage and home equity lending," said Clifford. "Low home prices, affordable rates and the homebuyer tax credit are all driving more buyers to the housing market, so the stage seems set for a gradual recovery."
