When a local ad slot during the Super Bowl became available at a discounted rate, Canvas Credit Union leaped at the chance. The credit union, based in Lone Tree, ran a 30-second spot just after halftime to highlight its new zero-down mortgage.
And the applications started pouring in.
“We got in one night what we usually get in half a month,” said Tansley Stearns, chief people and strategy officer at Canvas. In two days, the ad generated 117 applications for the “100% Home Mortgage.” Of those, 53 have moved forward, and more applications keep pouring in.
The average cost of a 30-second national spot hit a record $5.25 million this year. Stearns wouldn’t disclose what Canvas paid for its ad, but she said local ad rates are a fraction of national ones and that Canvas paid one of the lowest rates for a local spot.
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The ad didn’t come with splashy celebrity endorsements, a la Steve Carell, Lil Jon and Cardi B pitching Pepsi. Nor was there a surprise twist: Who could have ever predicted the Bud Knight would be killed off to promote HBO’s Game of Thrones?
The credit union already had completed a television ad shot by its in-house videographer. But it needed a way to get the word out to its target audience: first-time homebuyers along the Front Range struggling to save for a downpayment.
Mortgages have represented a small part of Canvas’ overall loan portfolio, said chief lending officer Chad Shane. Canvas has wanted to expand in that area and made a significant investment in training staff and in building an online platform to accept and process applications.
Zero-down loans were pretty much left in the dustbin following the housing crash. But high home prices in metro Denver and the difficulty young buyers are having in raising a downpayment have helped bring them back.
Last June, the Credit Union of Colorado reintroduced the zero-down conventional mortgage and others have followed. But their return looks to be coming late in the housing cycle.
Home prices are now rising at a much slower pace in metro Denver, and if trends continue, gains could flip to declines. The median price of a home or condo sold last month was up 2.6 percent from a year earlier, according to the Denver Metro Association of Realtors. In January 2018, home prices were rising at a 10-percent annual clip.
“We are reading the same information. We are aware of that. We are good at managing risk,” Shane said. “It comes down to evaluating each of these loans.”
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Borrowers taking out the 100% Home Mortgage will pay a higher interest rate, around 5.25 percent currently, Shane said. The credit union lists a 4.5-percent rate on a conventional 30-year mortgage.
And the mortgages will remain with the credit union, containing any damage if its underwriting standards prove too loose.
Canvas Credit Union has 240,000 members, $2.4 billion in deposits and 26 branches. Canvas made headlines last year by agreeing to pay $37.7 million over 15 years for naming rights to Colorado State University’s new football stadium in Fort Collins. The sponsorship was tied to Canvas changing its name from Public Service Credit Union.
