CHARLESTON, S.C.-South Carolina FCU is offering to beat just about any mortgage loan deal in the country with its Mortgage Loan Guarantee.
As a result, the CU's mortgage pipeline is up 40%. But the $1.2-billion credit union is not getting slammed from people taking the credit union up on its new offer; instead, most of the rush is coming from members who saw the offer but are saying they're happy to take the credit union's standard mortgage rate-a 3.875% APR 30-year fixed product.
Just one quarter of prospective borrowers have been asking for a better deal, explained Marino Cecchi, VP of mortgage. "Members have come to learn that the credit union generally has the best deals around. They trust us and know we place their interests first. Those taking us up on the offer tend to be bank customers who walk in, look at us skeptically, and say, 'Are you really going to do this?'"
The guarantee allows anyone to bring in a lower rate and ask SCFCU to beat it. The competitive offer has to come from a federally insured financial institution that has a website that includes all of the mortgage loan pricing. The credit union factors in all of the costs to come up with "the best overall deal" for the member. If someone does not want to bring an offer to the credit union, SCFCU's loan officers have a sheet of the best deals locally and helps the person comparison shop.
The goal of the promotion, outside of boosting slow to no loan growth, is to make life simpler for members. The CU's tagline is "Life Simplified," said Cecchi. "We want to take the hassle out of shopping for a mortgage because we know that can be difficult and stressful. We call this 'Mortgages Simplified.'"
Since the credit union has such a loyal membership it has only had to reduce its rates, on average after one month of the offer, by about five basis points. South Carolina Federal had budgeted for a 12.5-basis-point drop from its current rate.
The promo's real impact on the loan portfolio will be felt in January and February, noted Cecchi, citing the full pipeline. However, despite being introduced late last year (Nov. 12), the offer helped the credit union exceed its $12-million annual mortgage-lending goal by about $2 to $3 million.
What the promotion really did for the credit union, said Cecchi, is make it clear to members and the community the credit union offers mortgages. "We realize that many people don't even know we offer mortgages. This is getting the message out to builders and realtors too."
'Good Competitive Offer'
SCFCU did not lower its current rate for the offer, but first checked to measure how its rate stood up in the area. "We saw we had a good, competitive offer, and felt there was no reason to change," Cecchi said.
The current offer states that it is for a limited time and Cecchi explained the approach was taken to make sure the credit union could cut off the offer if demand became too great. "We did not want to slow down the loan turnaround or impair service," said Cecchi, who noted it's taking SCFCU about 40 days to close. "We will run this for a couple months and then bring it back for two- to three-month stints this year."
Adverting includes point of purchase, branch signage, radio, print, and online.
