As we dive into 2023, one consistent trend I am already starting to see with credit union consumer lending teams surrounds navigating the rising rate environment. With this comes skills many lenders have either forgotten how to “flex” or simply have never had to learn.
In case you’ve missed the memo, the days of “As low as 1.99%…” are in hibernation for the foreseeable future, but here is part of the disconnect with your staff.
Take a look at the loan originators at your credit union, especially on the consumer side of the house. How many of them were in a lending role a decade ago? I’m guessing a handful. But, if you’re like many credit unions out there, this is the first time a large percentage of your origination team has had to learn the skills necessary to succeed in a rate environment like we are in today.
I’ll age many of us by saying this, but think about it this way, if you have a 30-year-old MSR/FSR taking loan applications at your credit union, she was in the 10th grade the last time the fed raised rates to what they are at today. And no, she doesn’t remember what we went through in the ’80s… she wasn’t even alive! Do you think she feels confident helping members navigate their budgets through this uncertainty? Or do you think she’s putting an application into your LOS and telling your member, “I don’t know what to tell you, rates are this high everywhere…”
How many of your consumer loan originators are in the same boat?
Let’s face it, selling historically low rates to members is not terribly difficult. In fact, most of your originators have had to do nothing but this for the entirety of their careers. But, for those of us alive to remember it, if the ’80s taught us anything (and I’m not talking about how cool parachute pants are), we know that our members will continue to need loans even when rates rise. The question is, is your lending team ready to navigate this?
Here are a few tips to help your credit union succeed:
- Keep the number of people in lending as low as possible. We’ve been saying this for years, but it’s times like this that make it even more apparent. Taking a loan application is a SKILL. You want your best people taking 100% of these applications.
- Focus on the payment. The BEST thing you can do for both your credit union and your member is to structure a loan around a monthly payment a member can afford. Ensure your originators know how to have real conversations with your members about payment.
- Train your lenders. If you think handing them a new rate sheet every week is enough, think again. This is uncharted waters for many of your staff.
- Be regimented and on top of your follow-up game. If you are not following up with your members someone else is! It’s 2023, you will not win your member’s business if you are relying on them to reach back out to you.
Need help setting your Lending Department up for success in 2023. Give us a call.
Jessica Vartanian
Sr. Consultant
CU Lending Advice
Jessica@culendingadvice.com