Mortgage lenders are experimenting with ways to use affinity programs and rewards points - a mainstay of the credit card business - in their own marketing.
Awards for Mortgage and Real Estate, a marketer in Santa Ana, Calif., has signed deals with the mortgage units of Washington Mutual Inc., J.P. Morgan Chase & Co., Citigroup Inc., and Wachovia Corp. to offer customers a choice of airline or hotel loyalty points when they buy or refinance a house.
Jamie KuBrock, the manager who handles the program for Wachovia, said the Charlotte company has participated for two years but declined to say how many loans it has generated. Mr. KuBrock also said he had taken advantage of the program for his own refi.
"This program has proven to be one of the best as far as value-adding," he said. "People are becoming more savvy about shopping for a lender."
Points programs have been used before in noncard consumer business lines. Capital One Financial Corp. has offered Hilton Hotels reward points for some time to some customers for refinancing auto loans. A spokeswoman for the McLean, Va., company said she did not know if it might broaden the plan to include other business lines.
The strategy may be trickier for mortgage or auto loans, for which customers shop infrequently, but the payoff for consumers can be sizable.
Users of Awards for Mortgage and Real Estate must register with its Web site or through its toll-free phone number to receive their points. They are then linked to the site of the desired bank.
Consumers who call one of the four lenders directly will not get the deal, partly to make sure it brings in new customers, a spokesman for the marketer said.
The spokesman also said that most of the marketing for the program is aimed at frequent fliers or hotel club members rather than the general public.
The site offers a choice of several frequent-flier or hotel programs for a mortgage, a refi, or hiring a moving company. For instance, financing a $300,000 mortgage earns 90,000 airline miles.
A spokesman for Citigroup said it joined the program in late 2003 and closed over $169 million of loans through it last year.
Industry consultants said it was encouraging that mortgage lenders were becoming more interested in such incentive plans.
"I think that the more the mortgage industry learns from other corners of financial services, the better," said K. Terrence Wakefield, the president of Wakefield Co. LLC, a Milwaukee financial services consulting firm. "Awards points are a way for mortgage companies to create some differentiation."
Pressure on mortgage operations to produce results in a shrinking market for mortgage refis will probably lead to more loyalty programs, Mr. Wakefield said.
The idea was probably borrowed from the credit card units of the companies involved, rather than developed by the mortgage lenders, he said.
Keith Gumbinger of HSH Associates, a financial information publisher in Pompton Plains, N.J., said he had noticed an increase in airline mile offers recently, though he does not track them.
"My suspicion is that with business being as good as it has been, there has been little reason to put those things together," Mr. Gumbinger said. "Now you might see more offerings."
The programs may never become a core element of mortgage marketing, as they have for credit cards.
Mr. KuBrock, for example, said he does not envision Wachovia's routinely offering points to every customer who takes out a mortgage. "When you are looking at different lines of business, I don't think it will be necessary to offer miles to compete," he said.
