Written by Tom Kirby on March 19, 2015
in Financial Marketing

As the Canadian real estate market continues to boom, mortgages are huge drivers of business for financial services companies. And, with Bank of Montreal and TD Canada Trust dropping their 5-year fixed mortgage rates to a record low 2.79%, the competition for the Canadian consumer’s mortgage purchase is set to ramp up in intensity. What do mortgage marketers need to know in order to stand out in the crowded marketplace? Here are three key facts that can help marketers prioritize their marketing spend and better connect with their customers:

1. Canadians are loyal to their existing mortgage providers. Overwhelmingly, Canadian consumers are loyal to their banking institutions. Approximately 80% of Canadian banking products tend to be with one financial institution. It is perhaps unsurprising that mortgages show a similar trend: 84% of mortgage customers choose to renew with their existing lender [Canadian Mortgage and Housing Corporation (CMHC)]. Although interest rates are the number one reason for switching, existing relationships and convenience are also important factors in deciding to stay with a current lender with 52% citing existing relationships and 40% citing convenience as either the primary or a secondary reason for staying [CMHC].

What this means for marketers: Your best choice for marketing ROI is to target your existing customers first (especially for re-financers), as their tendency to renew their mortgages accounts for a fairly reliable lifetime value. By creating meaningful educational content and tracking the behaviour of your existing customers, you can strike with a timely message in the initial stages of the customer journey. Furthermore, given that switches occur due to relationships, it is vital to put the tools in place to develop rapport with existing mortgage clients.

2. Digital is the key medium in the early stages of the mortgage consumer journey. According to data from Forrester research, at least 62% of Canadian mortgage consumers applied for a mortgage in branch. However, as the infographic below indicates, when people begin researching a mortgage, most are going online. See the chart below for a comprehensive breakdown [CMHC]:


What this means for marketers: Your digital channels should be your top priority. It’s vital to understand how your customer thinks and feels at the exploration stage of the mortgage purchase path, and customers are most likely to use a digital channel to interact with your brand when considering their options. Provide them with content tools such as mortgage calculators, affordability questionnaires, comparison tools, and downloadable guides in order to maximize the impact of your digital channels.

3. First-time home buyers opt for brokers at a higher rate. 31% of all mortgages in Canada are acquired through a mortgage broker. But first-time home buyers over-index on using a broker with 48% of them choosing to use a broker for their mortgage [Canadian Association of Accredited Mortgage Professionals].

What this means for marketers: Marketers in the broker space need to focus on how they can uniquely address the needs of the first-time home buyer, as do their counterparts in the lender space if they are looking to compete and reduce broker market share. First-time buyers have unique thoughts and concerns compared to next-time home buyers, and marketers in both spaces need to understand those differences in order to effectively speak to them. Recognizing that their needs, values, and pain points are unique and often drastically different from repeat buyers and re-financers are vital to capturing these high lifetime value customers.

Written by Tom Kirby, Account Manager at Ariad Communications and David R. Kille, Ph.D., Researcher at Ariad Communications.

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