Without audience targeting are Google Ads Dead? Think again…
Early this month Google announced new restrictions for targeting specific audiences. The restrictions apply to content related to housing, employment, credit, and those who are disproportionately affected by societal biases. The news of these restrictions created quite a stir among industry brokers and lenders who heavily rely upon targeted Google ad campaigns. All which may have you asking if these changes will kill future reverse mortgage advertising on the world’s most popular search engine. In just a moment we’ll hear from our online SEO expert Josh Johnson to find out.
Google’s restrictions are not necessarily novel nor unexpected. It was just over two years ago Facebook faced scrutiny from federal regulators for allowing those offering credit or housing finance to restrict ad audiences by race or religion among other questionable metrics that would violate HUD’s fair housing rules. An investigation by ProPublica broke this news in October 2016. It was nearly two years later in August 2018 that HUD filed a formal complaint against the social media giant for discriminatory advertising practices. Seven months after HUD’s complaint Facebook announced sweeping changes. Both Facebook and later Google, took a blunt approach much to the chagrin of lenders and service providers.
What ad filters are going away? In its official release Google revealed, “credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Is this the end of Google ads for reverse mortgages? To answer that question I reached out to Josh Johnson who heads up Reverse Focus’ Online Dominance SEO program and Google marketing. Here’s his explanation.
Here’s what makes Google unique from other platforms and why reverse mortgage Google ads will continue to reach the intended audience.
To summarize, older homeowners are intentionally seeking out reverse mortgage information on Google which means, yes-your ads will be seen by your target audience, even though you can no longer target specific age groups.
Inflation is already here in these sectors say economists.
“Don’t say I didn’t warn you. The possibility of a 1970’s-style [inflation in] America in the year 2021 is increasingly looking like a reality”, begins Trish Regan in a recent post in American Consequences. Consequences. It’s somewhat preposterous to believe that there are no economic repercussions when our money supply is increased by 24% in a single year- a figure some experts expect to climb to 40% by the end of 2021.
Inflation occurs when your purchasing power decreases and the costs of goods and services rise. So how could inflation affect older homeowners and reverse mortgage lenders?
First, when Treasury yields rise, secondary market investors who purchase mortgage-backed securities demand higher rates. They want compensation for the greater risk. When Treasury yields drop we see lower rates on mortgages which prop up or stimulate the housing market. Today low rates have provided a temporary bright spot in the U.S. economy and have driven a record number of reverse mortgage refinances.
Second, since adjustable-rate HECMs are using the 1-year CMT index when true inflation emerges rates will climb thus reducing a borrower’s principal limit factor (PLF) or available loan proceeds. While the government’s cost of borrowing money is historically low today, it is certain to increase. Until the Secured Overnight Financing Rate (SOFR) is approved for HECM loans domestic rates will prevail with the CMT. Last week mortgage rates surged as treasury yields increased to their highest level since March 2020 when the coronavirus pandemic hit.
Third, when the costs of goods and services do spike homeowners on a fixed income will need to cut their expenses or find alternate sources of cash flow. In the meantime, economic concerns and low rates have heightened interest in reverse mortgages. We interviewed Melinda Opperman from credit.org for this week’s podcast. She confirmed a notable spike in counseling sessions- many of who are citing a reduction of monthly income, refinancing for more cash, or the desire to help family members who’ve suffered job losses. Nearly every borrower has mentioned COVID-19 during their session.
While the Federal Reserve is confident they can prevent an inflationary spike history has taught us that reality often interjects itself into the best-laid plans. For example, today it takes $6.74 to purchase what $1 did in 1970. Four years later inflation exceeded 11% in the final years of the Viet Nam War. Prior to a spike in inflation, consumers take the buy now rather than later approach seeing the value of their dollars decline. Unfortunately, that urge to spend quickly can create an inflationary loop with the economy finding itself with an excess of cash that no one wants. Closer to home, inflation increases the costs of borrowing for those seeking a reverse mortgage both accelerating growth of the loan balance and any unused line of credit.
However, not all are convinced the specter of inflation looms ahead. Carl Weinberg, chief economist at High-Frequency Economics told CNBC that expectations of inflation are detached from reality. “An important element in inflation are wages and people getting higher wages during a time of still very high unemployment and still a lot of slack in the economy,” However in the markets perception is reality. “We are going to see maybe as much as 2.75 percentage points added to headline increases in CPI (consumer price index inflation), headline inflation rates in the eyes of people. But increases in CPI are not inflation and this is not inflation.” However, with food and energy prices boosting the CPI consumers are likely to blame inflation. In the meantime, reverse mortgage lenders find themselves in a most opportune moment as home values continue to appreciate against the backdrop of astonishingly-low rates.
Additional Reading | Sources cited:
1-year CMT rates: Selected Interest Rates (Daily) – H.15
Treasury Yields: How Treasury Notes Affect Mortgage Rates
Mortgage Rates Surge: Mortgage Rates Surge on Rising Treasury Yields, Inflation Fears
Value of $1 from 1970 to 2021: US Inflation 1970-2021
‘This is not inflation’: Economist says expectations are unanchored from reality