NORTH HAVEN, Conn.-Connex CU believes a 10-year home loan is perfect for the current economy and has the numbers to prove it-$19 million from 148 loans over five months.
The campaign exceeded the credit union's goal by almost $5 million and has Connex on track to beat its $76.8-million overall loan goal in 2011. The $360-million CU this year is growing loans by 4.8%. The loan special drove a 200% increase in the number of loans and a 500% increase in balances over the same period last year.
The 10-Year Home Loan is a home equity loan offered members with a 10-year term with rates as low as 3.951% APR. "We found this was a real sweet spot with people who have 10 to 15 years, sometimes less, in terms of time left on their mortgage and they might consider refinancing," said Tansley Stearns, VP of sales and service.
They key to all the activity, according to Stearns, is the loan is done with no closing costs. "We knew that would be ideal for consumers who wanted to refinance their mortgage payment amount or pay off their mortgage sooner, but hesitated because of application fees, attorney's fees, appraisal fees, etc., associated with traditional mortgage refinancing."
Who Is Being Targeted
With the 10-year special, the member didn't have those fees because the loan is an equity loan with the CU in first lien position, explained Stearns. "In an effort to increase our loan volume with this promotion, we targeted consumers who were likely to have around 10 years left on their current mortgage."
The program stipulated that loans could not exceed $300,000, loan-to-value should not exceed 80%, new money only, and no escrow for property taxes. Connex leveraged its Home Loan Savings Analysis tool to help target and qualify members and non-members. The loan was promoted via e-mail, on TV with 30-second spots, and advertised in local newspapers, Web ads, and on social media sites. An internal staff incentive program was employed, as well.
Stearns pointed out the loan also returned 61 new members, with 23 opening checking accounts. The 10-year loan allowed members to take the CU's lowest rate by paying one discount point, Stearns said, which added some extra fee income. "Due the success of this promotion, we plan to run it again."
