While the number of Americans underwater in their home loans continues to increase, direct mail offers for mortgages and loans have plummeted. Four years after the recession started, direct mail levels haven’t rebounded, mainly because banks are reluctant to lend and consumers are reluctant to borrow. One thing consumers aren’t reluctant to do; however, is to seek out loans with better terms. According to Mintel Comperemedia, in the past 15 months 72% of all mortgage offers have included an option to refinance, with offers reaching a high of 78% in February 2011.
“With the economic downturn and the legislative changes that have impacted banks’ revenue, banks have turned to a relationship banking strategy to recoup their losses and create more loyal customers,” says Susan Wolfe, vice president of financial services at Mintel Comperemedia. “Adding loans to a customer’s suite of products almost guarantees a profitable customer. And requiring automatic loan payments through a new or existing checking account ensures loyalty.”
And building that loyalty is essential, as Comperemedia’s Lifecycle Panel, a static panel of consumers who send in their direct mail and email, recently found that existing mortgage customers are often bombarded with refinancing offers. One participant was targeted by 12 different companies for a refinance offer since June 2011.
“In the case of mortgages, the fact is that banks are forced to offer current customers refinancing options in an attempt to avoid losing the customer through a refinance with another bank,” notes Susan Wolfe. “To overcome these factors, banks are attempting to market loans based on relationship banking, which means most of the bank activity is a cross-sell attempt. Chase, U.S. Bank, and Wells Fargo are cross-selling loans along with a variety of other banking products in their efforts to pursue a relationship banking strategy”[Source: Research conducted by Mintel Comperemedia. 28 June 2012. Web. 29 June 2012.]