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