Diorex

In case you have not heard, the mortgage industry is in a free fall, basically causing the stock market to have a black eye today.

Here is some of the potential fall out for affiliates.

1. If you are promoting US mortgage leads, every broker I know (just a few) is saying that credit quality is becoming more and more of an issue. You cannot sell any “Liar Loans” , No documentation, Stated income loans. Those loans are as much as 40% of the volume in the business. It is frankly amazing that those loans were ever available. If brokers cannot sell the loans, then they are unlikely to continue to buy leads.

At least one mortgage affiliate program lowered mortgage payout by half today.

2. Watch for fallout from other finance products. Any lenders at all from debt consolidation, to auto to student loan to credit cards etc. Are all likely to tighten up. They will be less enthused about buying new leads and more concerned with credit quality. This happens every time there is a credit crisis in this country. Lenders tighten up and make loans only to those who are credit worthy. So I would expect CPA’s on finance leads to go down.

3. I would also look for some trickle down to lead exchanges and affiliate programs. Some of these guys are likely to get stiffed for mortgage leads from companies who get caught up. I would be very aware of making sure I got paid and making sure I did not have too much exposure from any one program. How much trouble would you be in if you had paid out a months worth of paid search and did not get paid from your affiliate program? Never a bad time to assess your personal risk.

4. The housing market, between mortgages, real estate commissions and construction is something like 15% of the US economy. If mortgage get tight, then this might affect the entire economy, meaning consumers are less likely to buy lots of non finance and mortgage related items. Conversely, there are some segments that should do well. Things like Bankruptcy lawyers, credit repair, maybe even non-luxury brands. Think outside the box.

5. At the very least, I would expect mortgage related keywords to gradually get cheaper - so if you do arbitrage be on the lookout for falling ROI. Depending on the severity, if this extends to the general economy, lots of keywords might get cheaper.

Many people do not realize just how sensitive our economy is to low interest rates and easy credit. Combine it with rising gas prices over the summer and things can head south quick.

Disclaimer: I tend to be a doomsday prognosticator and often see things worse than they are, so take all of the above with a grain of salt. Bottom line, What is your exposure to mortgage markets and how might you be able to benefit from a general economic decline? Better to think about them before rather than after the fact.

This entry was posted on Tuesday, March 13th, 2007 at 5:22 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.