7 Ways for a Mortgage Lender to Stand Out Without Lowering Interest Rates

With today’s historically low rates, the mortgage lending industry is more competitive than ever. This makes it even harder for lenders and originators to attract members and clients and to stay ahead of competitors.

When competition is high, in many cases, the only way that most mortgage firms know how to close a deal is to offer a low rate. However, this is not only expensive, it starts a rate bidding war that puts a damper on the process.

The good news is that lowering interest rates isn’t the only way to attract new clients and to stand out. Here are seven ways to keep your company relevant in today’s highly competitive landscape.

1. Be More Than a Lender

Potential clients want a lender that they can trust to provide sound answers to their questions when they need it. Being able to predictively understand when each of your clients needs service will certainly set you apart as a lender. You can then proactively communicate with them across the right channels.

Create a process for qualifying and engaging existing and prospective clients before the mortgage application process. By providing value and insights up front, clients will feel empowered and choose to do business with you leading up to their next transaction.

2. Have a Diverse Portfolio and Personalize the Experience

No two borrowers are alike, which is why it’s so important to offer a diverse portfolio of loans that meet the needs of today’s broad spectrum of potential clients.

Mortgages aren’t a one-size-fits-all product. You need the ability to tailor your loan programs to meet the unique needs of each client. Outshine your competition by serving the underserved. It’s also important to offer more than conventional loans. Enhance your portfolio by providing:

  • VA loans
  • ARMs
  • Refinancing options

The more options that you offer, the more clients you can serve.

See How Senso partnered with TransUnion to increase close rates by 5X and interest income by 10x

3. Offer Support and Guidance

We live in a world of instant gratification, which is why online lenders and loans continue to grow in popularity. But when it comes to obtaining a mortgage, many clients realize that instant gratification isn’t as important.

After all, purchasing a home is one of the biggest investments people make in their lifetime.

For first time homebuyers, the process can be confusing or overwhelming. This is why it’s important for mortgage lenders to serve as a support system every step of the way.

By being accessible during the process, and providing engaging self-serve experiences, lenders are able to give clients’s much needed peace of mind and confidence.

4. Prioritize Customer Service

Reputation is one of the most important factors when clients choose a mortgage lender. As with any other product or service, clients research or get referred to lenders before ultimately deciding which one is best. In the age of online reviews, testimonials, and word of mouth, your reputation is more important than ever.

A solid reputation starts with prioritizing customer service. How you treat and correspond with clients has a huge impact on how you’re viewed in the public eye.

While mortgage lending can get tense at times, it’s important to always deliver a real-time, customer-centric experience that best reflects the company and overall brand.

5. Get Involved in the Community

Community outreach is a great way to drive awareness to your brand while also showcasing your mortgage solutions. Local events are a great way to connect with those people who are considering buying or refinancing a home.

Clients are more likely to be comfortable working with a lender that they’ve seen out and about and doing good will. People are also more inclined to do business with a company that goes above and beyond to be active in the community.

There are endless opportunities to get involved, including:

  • Sponsoring local events
  • Attending occupational events for teachers, police, etc.
  • Hosting fundraisers

Use these events as a way to not only increase brand awareness, but to connect with those in the community. The more involved you are, the better.

6. Embrace Digital Marketing

The right digital strategy enables you to outpace your competitors. In the age when information is readily available at our fingertips, the fact is that people want personalized answers instantly. They also want to be able to find them seamlessly.

To meet this need, it’s important to provide a website that is user-friendly, intuitive, and accessible on all screen sizes. Use your website to draw in potential homebuyers while also offering the answers they’re looking for.

Website aside, a social media presence is also crucial for keeping up with modern expectations. Instagram and YouTube are all great platforms for engaging with potential customers who may be interested in buying a home.

But having a social media presence isn’t enough. Dedicate time and effort into engaging with potential clients. Create posts. Respond to comments. Answer questions. When used properly, social media can help you to stand out among the crowd.

7. Measure Outcomes

The ability to provide borrowers with the service they need, when they need it, cannot be developed overnight. Being able to measure outcomes requires discipline, the right tech stack, and the ability to test, learn, and track the client journey from start to finish.

Once your organization is in a flow of continuous learning and improvement, superpowers will begin to develop which will soon become the lifeblood of your organization. Developing a feed of real-time data routed to the right individuals in your organization will unlock real-time decision-making which will enhance the client experience, maximize profitability, and reduce costs.

Final Thoughts

With more people buying homes than ever before, now is the time to find ways to connect with those who are in need of a mortgage lender.

While competition is thick, don’t fall into the trap of lowering interest rates to attract new clients. Instead, use the seven strategies above to keep your company thriving. With the help of these strategies, you can outpace your competitors and enjoy a steady flow of new and return members and clients.

Top 8 KPIs That All Mortgage Lending Teams Should Measure

A profitable mortgage company is one that constantly evaluates its decisions to ensure that the loans it is originating are profitable. The best decisions are made with the backing of solid metrics, to include mortgage lending key performance indicators (KPIs).

Mortgage lending KPIs are an invaluable tool that enable your team to really understand what’s going on beneath the surface. Basic and advanced KPIs serve an important role in the success of your company in the short and long-term.

8 Most Important KPIs

Unsure what to track or how to start? Here are seven of the most important KPIs that all lending teams should measure. Each of these KPIs can provide crucial insight into the health of your lending team and overall business operation.

1. Average Cycle Time

Average cycle time is the sum of days from application submission to load funding divided by the number of loans funded in the same period. This is a basic KPI that shows efficiency as well as areas where improvements can be made.

Poor cycle time directly correlates to loan profitability and pull-through rates. When loans don’t close on time, it’s a negative experience for borrowers and referral partners alike.

As improvements are integrated into the team’s process, average cycle time should decrease.

2. Pull-Through Rate

Pull-through rate is the number of funded loans divided by the number of applications submitted during the same period. This metric offers a high-level perspective into the health of your mortgage operations. It speaks to several factors, including:

  • Workflow efficiency
  • Level of customer service
  • Quality of submitted applications
  • Interest rate competitiveness

Pull-through rate also indicates if you’re working with the ideal customer profile (or not).

This metric doesn’t point to failure at a certain point of the mortgage process. Instead, it can be used to identify if there are any inefficiencies. At the same time, pull-through rate can also be used to determine if your lending team is ready to take on more loan applications.

3. Mortgage Lead Conversion Rates

It’s important to track how many leads coming from marketing channels are converting into loans. You may be spending marketing dollars on paid search and paid social campaigns, purchasing lead lists, running organic social media campaigns, and working with partners and influencers to generate leads. But do you know which marketing initiatives are bringing in the highest quality leads?

In addition, how you nurture those leads is equally as important. You can simply assign your loan officers to cold call the leads hoping some of them are in-market and looking to buy. Or you can send promotional e blasts to engage leads. Unfortunately, those often land in junk folders and cause prospects to unsubscribe because of their promotional nature.

Instead, to improve your mortgage leads conversion rates you can use tools like Senso to identify in-market customers and send them personalized campaigns based on their affordability and neighbourhood preferences. Such campaigns have proven to increase engagement rates by up to 300% due to their high relevance to homebuyers.

4. Average Mortgage Loan Value

If you’re looking to put a number to loan profitability, this is a must track KPI. Average mortgage loan value is the total loan volume originated divided by the number of loans funded in the same period.

The workload for a conforming conventional loan doesn’t change much, no matter if the loan is for $200,000 or $450,000. The most notable difference is the revenue generated from each of them.

Strive for an average mortgage loan volume that is close to the conforming limit. The closer you are, the more likely your lending team is to generate strong profit.

5. Application Approval Rate

Application approval rate is the number of approved applications divided by the number of submitted applications. This metric provides crucial insight into your loan application workflow as well as client acquisition.

A low application approval rate indicates one of two problems. The first is a disconnect in identifying the ideal customer profile. This leads to a growing number of mortgage application submissions from unqualified applicants. The other issue could involve the document gathering and application review processes.

A poor application approval rate is a telltale sign that your operation is wasting time and money.

6. Cost per Unit Originated

Cost per unit originated is the total production cost divided by the number of loans funded in the same period. This KPI measures efficiency relative to many factors, including cycle times, staffing, office expense, and pull-through rate.

Any deficiencies in these areas can lead to excess overhead expenses, which leads to a high cost per unit. This has a direct impact on profitability.

Hiring timing is crucial. Hiring too soon can cause cost per unit to soar, while hiring too late can cause severe lags in cycle time. We saw an example of this during the initial period of COVID-19, where many originators and servicers were challenged by a lack of staff to meet demand.

7. Abandoned Loan Rate

Abandoned loan rate is the number of approved but not funded applications divided by the number of approved applications in the same period. This metric indicates potential issues with post-application processes.

If applicants are approved for a loan but not going through with the process, lending teams should be questioning why a qualified and approved borrower abandoned the loan. This is where automated nurturing and engagement in your lower funnel is critical.

A high abandoned loan rate could be due to poor engagement or interest rate competitiveness.

8. Profit per Loan

Profit per loan is total business revenue minus total production cost divided by the number of loans funded in the same period.

Total loan volume often gets all of the attention, but profit per loan is the much more important number to track. This metric is the best way to assess the health of your mortgage operations.

Companies may experience low profit per loan due to low average loan value or high cost per unit originated loan.

KPIs Directly Impact Profitability

When loans aren’t closing on time or performance isn’t going as planned, it can be impossible to pinpoint what’s going wrong. This is why it’s so important to track clearly defined KPIs. These metrics are critical in understanding the relationship between performance and operational success.

Imagine the scenario of your team’s financial performance dropping from one quarter to the next, even though loan application volume has held steady. In this instance, you should be wondering why you aren’t funding as many mortgage loans.

Having the right KPI strategy enables you to zero in on the issues contributing to poor financial performance. Maybe there’s a bottleneck in application processing that is causing an increase in abandoned loan applications. Or maybe loan approval rates have dropped, which could be caused by poor underwriter performance.

Whatever the cause may be, tracking the right KPIs makes it possible to identify what’s going wrong. In turn, you can make swift corrections to get numbers back on track.

Final Thoughts

Neglecting KPIs will have a lasting impact on profitability. The inability to pinpoint what’s wrong makes it impossible to make improvements. To ensure you have the most accurate and up-to-date numbers, invest in a third-party tool that connects to your existing data flows and application processing systems.

By tracking these seven KPIs, you can finally make headway on improving profitability so that you meet or surpass this year’s goals.

With Senso you can identify in-market customers who are engaging with your content, and proactively nurture them with data-driven personalized campaigns via email, text, website, or banking app leading to higher pre-approval rates and sales.