Expert Insights: How to Navigate Over-Hyped Inflation Headlines with Julian Hebron

On this episode of Expert Insights, our host Joe Welu is joined by Julian Hebron, founder of The Basis Point, for a discussion on mortgage financing, how current events and inflation are impacting the lending industry and what business leaders can do to respond effectively.

Julian is the founder of The Basis Point, a sales and marketing strategy consultancy for consumer finance and real estate firms. Recognized as one of the foremost experts on lending and consumer finance, Julian has over two decades of experience in the industry with leadership roles at Wells Fargo, loanDepot, and LendUS.

In this week’s show, we look at what inflation headlines and rate increases mean for the lending industry and how business leaders can optimize budgets and drive conversion in the current increasingly competitive business climate.

What is the Impact of the High-Stress Headlines?

Recent headlines have been focused on the surging Consumer Price Index (at 7.5% at the time of this recording). This rate is both more than expected and the highest point it’s been since 1982. As a result, there’s a sense of panic in the media, which in turn is driving public sentiment. There’s also a deep concern for what this will mean for mortgage rates midyear and by the end of the year.

Within the mortgage industry, business leaders will likely face the need to make some stark decisions for cost control. While admittedly difficult, these rate changes and their ripple effect are also to be expected – they are a part of the normal function of market cyclicality.  

Against this business climate, Julian and Joe advise leaders in the mortgage business to do the following in order to maximize their business funnel and increase their value to the customer.

1. Remember the market is still there.

Even in the current scenario with rates going up and margin compression, there’s still a massive amount of people who will need to refinance their homes. According to Julian, the volume prediction for this coming year is $2.6 trillion in mortgage funding and an estimated $2.5 trillion next year. That’s an estimated 7.15 million available loans for the mortgage community. Admittedly, this is a significant drop from last year, which was 11.2 million – but a more competitive market is still a strong, vibrant market filled with potential opportunities. 

2. Maximize the funnel by using data and technology effectively.

In this more competitive market, operational execution is the key differentiator on performance. This means organizations must be incredibly disciplined around their business models, how they’re going to market, and how they’re implementing systems to ensure opportunities aren’t missed.

3. Targeted execution by business model.

Julian is clear that optimizing on opportunity requires tailored execution across the three core models of the industry: direct, wholesale, and retail. When there’s a climate of severe market change like this one, the businesses that successfully maximize their funnels are those that address the nuances and differences of each of these models.   

4. The embedded customer focus sets up retail for success. 

Julian believes that the retail component of the mortgage industry – which includes the broker community, who are retail officers going through a different channel – is especially well-positioned for the current market. The reason? Retail has always been focused on how to best take care of customers. In this competitive environment, it’s what matters more than ever.

5. Look to educate and advise. 

In the current market, where the combination of rates and home prices has made affordability challenging, it’s the ability to effectively educate and advise customers that will give your business meaningful differentiation – with real bottom-line impact.  

If you’re running a consumer direct or a retail channel, the competitive advantage will be with those who have leveled up their thinking and execution on how they engage and educate customers and have built in ways that they can systematically add value beyond the transaction. Finally, businesses should script their loan officers in a way that intentionally cuts through the headlines with the core message that the panicked headlines have nothing to do with the reality of how qualified individual customers are for financing. It’s the ability to educate and advise from a trusted position that will be paramount to helping customers navigate the current market. 

In 2022, the opportunities for a strong fiscal year remain, but these opportunities will not be distributed equally. Success in the mortgage industry will skew heavily towards the organizations that have been outstanding at attracting and retaining talent, empowering them to educate their customers in a way that cuts through the headlines and then systemize these best practices across the organization.

For more of Julian Hebron’s insights, listen to the full Experts Insights episode.