Lenders and mortgage brokers that have invested in social media for marketing and communications will generate disappointing results.

That’s because borrowers are more likely to respond to traditional forms of marketing and communication than to a Twitter advertisement, a Facebook post or another form of social media, according to Borrower Preferences and Mortgage Originations, a survey from SecondaryWire, the wholesale mortgage exchange, located in San Francisco. Survey respondents are mortgage purchasers and represent a cross section of mortgage borrowers.

“The results of our survey showed social media was neither significant as a communication channel nor did it impact the decision of where to go for a loan in any significant kind of way,” said Larry Mullen, senior vice president and founder of SecondaryWire. “Social media was preferred by just six percent of respondents, so it isn’t important to borrowers—and won’t factor into their decisions on purchasing a home loan.”

 One point the data drives home. Borrowers selected the lender or mortgage broker for the same reasons they had done so for years, as follows:

Among the top reasons for selecting a lender/broker were the following: The lender with the lowest rate, 47 percent; able to meet my terms, 32 percent; reputation of company, 31 percent; existing banking relationship, 31 percent; had the best mortgage products, 30 percent.

A referral from someone I knew, was sixth, 28%. For a transaction that’s as important as purchasing a mortgage, it’s a bit of a surprise that the choice—of a referral--failed to rank among the top-three. Still, it did better than the social media options—which were at the bottom among all choices.

Only 13 percent of respondents thought an online loan application was important. Virtually no one considered it important that the lender/broker had a mobile app, 6%. And a referral on social media was virtually worthless, with 1% responding that it was the reason for their selection of the originator.

What were your most important reasons for selecting the lender/broker who processed your loan? (Respondents could select more than one answer.) 

 To devotees of social media, it might come as a surprise that 64 percent of respondents preferred to communicate with their originator with their phone, 39 percent; or in person, 25 percent. The responses haven’t changed very much from what answers would have been five, 10 or even 15 years ago. Fully 29% preferred to use email to communicate, despite security risks and exposing their personal confidential data to cyber-thieves. As for social media, six percent said they preferred to use social media to communicate. Just one percent preferred to use video chat and online meeting platforms.

Rising rates have all but eliminated the incentive to refinance a mortgage.

That’s because of the continued effect of rising interest rates on refinance candidates, or homeowners with mortgages who would realize a minimum of 0.75 percent rate reduction from a refinance, according to Mortgage Report Monitor from the data and analytics division of Black Knight Inc.

"Due to rising rates, some 6.5 million homeowners that previously could have benefited from refinancing their mortgages have missed that opportunity," said Ben Graboske, executive vice president of Black Knight's Data and Analytics division. "On average, these homeowners had a 22-month window to refinance. All told, that amounts to an aggregate of $1.5 billion in lost savings every month for these borrowers.

The following provides the statistical underpinnings for that trend are the following:

• After flattening through most of the summer, the 30-year fixed interest rate has climbed 0.35 percent over the past two months, and is now up 0.85 percent year-to-date.
• Just 1.86 million mortgage holders have an interest rate incentive to refinance, a 56 percent decrease from January.
• An estimated 6.5 million homeowners have now missed their opportunity to refinance their mortgages due to rising rates, for an aggregate of $1.5 billion in missed savings per month.
• Interest rates continue to put pressure on home affordability as well, with the monthly principal and interest payment on the average-priced home rising 18 percent so far in 2018.
• At the national level, it now takes 23.6 percent of median income to make the monthly payment on the average-priced home, as compared to the long-term benchmark (1995-2003) of 25.1 percent.
• Even if home prices were to stay flat, another 0.50 percent increase in interest rates would make homes less affordable at the national level than those long-term norms.
• 10 states are already less affordable than their respective long-term norms, with another six within one percent of those benchmarks.

This year alone, 2.2 million borrowers had the opportunity to see a 0.75 percent reduction on their first mortgage rates but did not take advantage of the reduced rates before increases to the 30-year fixed rate removed their incentive.

In 2018, the average 30-year fixed mortgage rate is up 0.85 percent--with 0.35 percent of that rise coming over the last two months after remaining flat for much of the summer. The result is that the refinance population has been cut by more than half--56 percent--since the start of the year.

And, the financial prowess to afford a home has moved beyond the grasp of  more borrowers since January.

It now takes 23.6 percent of the median income to make monthly payments on the average-priced home, making housing the least affordable it's been in nearly a decade.

"The rise in interest rates continues to impact home affordability as well,” said  Graboske. “The monthly principal and interest payment needed to purchase the average-priced home has seen a $190 per month increase since the beginning of 2018, an 18 percent jump.”

The Department of Labor reported that employment hit a record high of 156,562,000 in October. There were 250,000 new jobs added, or 4.5 million new jobs since November 2016, with gains recorded across all industries.

For the second straight month, the unemployment rate is 3.7%, the lowest rate since 1969. Six times this year, the unemployment rate has been under 4%, and the unemployment rate for Hispanic Americans was the lowest ever recorded, according to the Department of Labor.

“The housing sector registered job gains this month, but the stronger growth in average hourly earnings relative to the private sector overall suggests that labor availability remains a challenge,” said Doug Duncan, chief economist at Fannie Mae. “Information from the household survey indicates that the unemployment rate remains low and steady at a level last seen in 1969.” Gross Domestic Product in the third quarter was 3.5% and consumer confidence was the highest in more than 18 years.

All of which is good news for workers, who are beneficiaries, and are taking home more money.

"Over the past year, we have had the largest increase in average hourly earnings since 2009,” said Alexander Acosta, secretary of labor at the DOL. “It’s encouraging to see that Americans are seeing more in their paychecks as job creators compete for the best talent in the workforce.’

And don’t fear inflation.

“Meanwhile, average hourly earnings accelerated over the year,” said Fannie’s Duncan. “The increase in earnings is a welcome sign for workers and is unlikely to stoke faster inflation given the steady improvement in productivity. The updated information released today suggests that the labor market remains strong and inflation remains manageable, supporting our call that the Fed will raise its key policy rate in December.”