It can be difficult for mortgage lenders to find customers, especially in economic environments when consumer confidence is limited. There are only so many people who are both willing to buy a house and actually able to afford to take out a mortgage to pay for one.
Writing for National Mortgage News, contributor Garth Graham put it bluntly.
"The reality is this: compared to a typical consumer marketing effort, a mortgage loan is not a product that consumers need very often," he writes. "How many boxes of Cheerios could the cereal company sell if you only needed a box every five years?"
Graham argues that the current state of the market requires lenders to seek out specific niches where they can do business. As a start, he suggests that lenders use a tried and true method that has found success in numerous industries: reach out to customers who have already done business with you.
"You see, every mortgage company has a set of consumers that you worked with in the past," he writes. "You have a chance to work with them again."
Lenders, he adds, have "a couple of big advantages" when they seek out former customers. They can scour databases and alternative data sources and compare them to information they already have to estimate when these borrowers may be likely to need a new loan. In addition, if they have already done a credit risk assessment, they already have a good picture of the kind of risk that this customer brings to the table.
By building relationships and fostering repeat borrowing, lenders can maintain a strong business even in difficult times.