Author: Saroop Bharwani

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.

To learn more about senso, get in touch.

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 

The Importance of Tracking Your Home Buying Power 

Preparing to buy a home is a big step. The process of understanding what one can afford, where to search, and when to act can be unfamiliar and quite intimidating, especially for first timers.  In most cases, potential home buyers are left asking themselves the most important question when looking to purchase a home: what can I afford in the areas that I am interested in?

Understanding your home buying power is a very important step when beginning to look for a home. You might also be asking yourself: How do I figure out my home buying power? Where can I learn more about my home buying power? And What factors affect how much I can afford? 

The team at Senso.ai is here to answer all of your home buying related questions and help you prepare for the biggest financial decision you’ll ever make.

What Factors Affect Your Home Buying Power

The key factors in calculating an estimate of your home affordability, or buying power, are your monthly income, cash reserves – the amount of money you have for down payment and closing costs – your monthly expenses, and your credit profile which includes your credit score and monthly debt obligations. Whether you’re interested in buying a home soon, or a couple of years down the road, knowing the various factors that impact your affordability and how your affordability might change on a weekly basis now can benefit you when it comes time to start looking.

Why Knowing Your Home Buying Power Matters

Like your Credit Score, your Buying Power keeps you up to date on your affordability relative to trends in the real estate market before speaking with a lender or mortgage loan officer.  Whether you’re purchasing a home or not, having an ongoing sense of how your affordability is impacted will help you be prepared for when you decide to contact a lender and begin the mortgage process. While knowing your credit score can help you get an idea of what credit cards you are preapproved for, staying up to date on your home buying power through Senso Engage allows you to see what you can afford in selected locations across the U.S. and Canada. 

How You Can Achieve Your Housing Goals

Senso.ai builds valuable tools that are made available to prospective home buyers at various points during the home buying journey. Whether you are looking to relocate and buy a home a couple of years down the road, looking for your first home in a new city, browsing the market out of curiosity, or looking to invest in another property in the near future, having access to this information will help you be proactive in your home search.

Our goal is to provide you with an ongoing snapshot of what your buying power is so that you can be smarter in where to search and when to act on the home that’s been on your mind. 

Senso.ai is currently running a pilot program which enables prospective home buyers to proactively manage and track their purchasing power at their convenience through an online platform, regardless of what step of the home buying process you are at.

Click here to find out more about how you can get early access to your buying power to become smarter about your future home purchase. 

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.

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.

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.