Magazine article American Banker

Home Equity Ad Fight Puts the Emphasis on Price

Magazine article American Banker

Home Equity Ad Fight Puts the Emphasis on Price

Article excerpt

Advertising is starting to play a new role in finding and keeping customers for home equity loans. Not only are marketing budgets increasing, but the focus of ad content is shifting.

The addition of new players to the market is the main factor driving this change. "There is so much competition right now," said Christine Clifford, vice president at Wholesale Access, a Columbia, Md.-based consulting firm.

When home equity lenders advertise, they are more likely to concentrate on price than ever before, according to a survey of home equity lenders conducted by the University of Virginia's McIntire School of Commerce.

Teaser rates and low or no closing costs are expensive but increasingly important marketing tools, said Rich DeMong, a professor at the university.

Part of this emphasis is attributable to an increased consumer awareness of what home equity borrowing means. While advertisements in the past may have introduced homeowners to the concept, now they assume prior knowledge and compete on price.

Younger generations are especially open to the concept of borrowing against the equity in their homes, said Anne Morgan Moore, president of Synergistics, Atlanta. In response, banks are stepping into the low-equity home lending arena, a market traditionally cornered by finance companies.

Consequently, closed-end, subprime lenders have begun to pour money into advertising, Ms. Clifford added. "These companies used to have plenty of business without having to advertise much," she said.

Among finance companies, Money Store is often cited as the leader in effective home equity advertising. …

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