Mortgage Originators Are Facing A Challenging Time

It’s no secret that for the past 9-12 months the mortgage market has been suffering from a large decline in purchase money transactions. This has forced the Banks, Credit Unions and IMBs to zero in on the primary factors responsible for the extremely low capture and recapture rates across the industry; 5% and 14% respectively. These factors include: the need for accelerated pre-decisioning, lead scoring, effective leverage of channels, and personalized targeting. Effective solutions to these will create meaningful gains in new originations. Below we’ve outlined three approaches to managing them.

Leverage Your Channels Effectively

Leveraging your existing marketing and digital channels to engage your existing clients is essential and predicting which potential clients to market to, when to approach them, and what information to bring to their attention. Better use of data will help leverage channels and focus on nurturing the potential customer and their needs. A recent study by Equifax with Forrester Consulting revealed that approximately one third of banks and credit unions are collecting general information and data from common customer engagement channels; however, fewer than than 50% of them  are using it to better understand customer intentions and goals, improve the overall customer experience, or appropriately market to the customer. 

Get In Front Of Your Customers Sooner

Pre-decisioning and predictive lead scoring will allow institutions to bring personalization to the home buying process through either marketing or analytics. To successfully combat the reduction in business and lack of leads, institutions should create a joint initiative of the two across the business. Making use of data collected from online portals and mobile apps, for example, will help institutions capture the attention of potential home buyers and harness their business. A structured and data-based approach can be the distinguishing factor to customers – this approach reduces noise and helps nurture the relationship between the customer and the institution. 

Personalizing Consumer Content

Institutions are able to incorporate different types of data-based differentiated content into their marketing approach to nurture their potential clients and see an increase in overall retention rates. Content such as video and personalized engagement experiences will empower the customer and create a more fulfilling experience. We need to see institutions across the banking industry put customer value at the forefront of their personalization efforts. Automation and artificial intelligence are already significant in consumer banking, but can be used more efficiently to speed up approval wait times and processing times for banks and institutions. This content based on properly collected and deployed data can create improved targeted videos and digital experiences, highly relevant material, and create a frictionless experience for the customer. Senso.ai’s platform utilizes this valuable consumer data to proactively contact and engage the potential home buyer and create a nurturing experience. Properly applying these consumer insights will not only help institutions capture the attention of potential home buyers, but will work to establish trust and loyalty between the institution and its customer- ultimately increasing customer retention rates.

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Why Are Mortgage Recapture Rates So Low?

In the present market, mortgage originators are trying to find ways to fill the top of their funnel by providing deeply engaging content to prospective homebuyers, but it’s easier said than done. Most of the industry suffers from low recapture rates as existing customers flee to competing originators for their next transaction. 

The question is why?  

Recent data has shown that most lenders’ post closing surveys with high satisfaction rates and a willingness by clients to revisit that same institution for their next loan. But, actual retention rates are much worse than what these closing surveys would suggest. You might be curious as to why banks are seeing such tremendous discrepancies from the closing surveys to the capture and recapture rates and what factors might be causing this issue for banks, credit unions, and independent mortgage banks. Recent data from Black Knight’s Mortgage Monitor report indicates that only 18% of refinance borrowers stay with their current servicer.

The Home Buying Journey

 

The issue of low retention rates lies within the traditional home buying journey as illustrated in the diagram above. The average consumer looking to buy a home often begins the buying process by browsing real estate platforms like Zillow or Redfin before connecting with a real estate agent. The problem arises when realtors refer prospective borrowers away from their existing institutions to competing originators. This is a result of the consumer’s existing financial institution(s) not proactively contacting them, pre-approving them, and collaborating with a realtor to identify the perfect home before their consumer is poached away by competing originators. When a potential buyer is between dreaming of a new home and browsing a listing, their natural behavior is not going directly to their previous loan officer or institution before continuing to explore the market. As the customer continues to browse listings and then connects with a realtor, the chances of them being connected with their existing institution decreases tremendously. Ellie Mae reports that 88 percent of the time, customers will close with the first or second lender they speak with, which makes getting in front of your customers at the top of the funnel vital to keeping them as a customer. 

 

The Importance of Timing

This current issue of low capture and recapture rates that many institutions are noticing has not yet been resolved by banks and credit unions. Timing is paramount for increasing retention rates; identifying the right client at the right time with the right message is critical if an institution wants to see an increase in their capture and/or recapture rates. The current issue is that banks, credit unions, and IMBs are not creating a personalized, targeted, and timely marketing approach that presents a strong competitive edge for the borrower to want to originate their next mortgage with that institution. 

 

Addressing The Root Of The Problem 

The current approach taken by institutions is reactive and untimely. If a customer has connected with a competing originator and the customer begins the pre-approval process, this is the point in time when the customer’s institution will receive a credit trigger. This credit trigger prompts them to reach out to the customer. At this point it is often too late to capture and recapture the customer’s business as they have already begun the approval process, resulting in an ineffective and untimely approach by their original institution.

 

Transitioning From Reactive to Proactive Contact

If banks, credit unions, and IMBs are looking to either originate more business via their existing customer base, or are looking to monetize their current customer base, instilling predictive alerts and developing digital nurturing campaigns that fit into the current workflow will create an overall mortgage origination lift. Introducing proactive and individualized digital nurturing campaigns will allow for banks to improve their overall approach which will result in the desired increase in capture and recapture rates. 

 

For more information on how you can incorporate predictive alerts and digital nurturing into your workflows, contact Senso.ai