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Mintel Comperemedia observes nearly 1% decline in rates for fixed rate mortgages
Chicago (June 17, 2008)-The Fed's rate cuts have finally impacted pricing seen on mortgage direct mail offers sent to consumers. In the first quarter of 2008, Mintel Comperemedia reports that the average rate on fixed rate mortgage offers sent through direct mail declined nearly a full percentage point (0.92%) from Q4 2007.
The average rate promoted in first quarter mailings for fixed rate mortgages was 6.22%, a notable drop from the 7.14% average observed by Mintel Comperemedia in Q4 2007. Fixed rate mortgages held steady at an approximate rate of 7.16% for all of 2007.
"Fixed rate mortgage pricing stayed stable in direct mail through 2007, but we've since seen a huge drop in rates since then," states Farah Huq, senior analyst at Mintel. "Lenders are capitalizing on today's attractive, low rates and trying to lure in business by promoting them."
With fixed rates steadily low and the economy shaken, Mintel Comperemedia sees lenders increasingly promoting fixed rate mortgages over variable rate mortgages. In the first quarter of 2008, nearly 100% of mortgage offers that disclosed a rate type promoted a fixed rate loan. Just one year ago, in Q1 2007, only 84% of these offers advertised fixed rate mortgages.
"Lenders realize that a low fixed rate is enticing to consumers, especially those wary of unsteady, adjustable rate loans," explains Huq. "Fixed rate loans offer people both a competitive rate and a steady monthly payment over the term of the loan."
The mortgage industry saw direct mail declines during the first quarter of 2008. Mintel Comperemedia projects that estimated mail volume for mortgages fell 17% from Q4 2007 (from 261 million offers to 218 million). Mortgage mail volume has declined 57% since Q1 2007.
Mintel Comperemedia provides competitive intelligence for businesses looking to advance and improve their direct marketing strategy. Tracking direct marketing (including mail, email and print advertising) targeted at consumers, small businesses and insurance agents, Mintel Comperemedia offers a unique perspective on everything from banking trends to insurance trends to credit card statistics. For more than 38 years, Mintel has provided insight into key worldwide trends, leading the industry for consumer, product and media intelligence.
Joanna Peot
Public Relations Executive
312-628-7946
jpeot@mintel.com