One Data Set Changing Mortgage Retention

A lost borrower can mean more than just one lost mortgage. Depending on the market, a lender that loses a borrower after a first home purchase could be missing out on three to five more originations during that borrower’s lifetime, making retention critical as market uncertainty continues to impact volume.

Mortgage originators should consider the net effect of lost mortgages as well. These missed loans have both a relationship cost and an opportunity cost. When prospective buyers go shopping for their next mortgages, it opens the door for other institutions to not only court them for all their lending needs, but competitors may turn one-time mortgages into lifelong customers.

Simple Data, Valuable Applications

Earning repeat business from customers requires lenders to examine their offerings from the customers’ viewpoint. What are the needs of homebuyers? What kinds of support do they need? And how do you know which borrowers in your database need that help?

Technology is changing how lenders find and help customers from their databases using one simple, but important, piece of customer data: home addresses.

Lenders are now using automation to monitor the Multiple Listing Service for new home listings that overlap with past borrower addresses. Before, a lender only had indirect means to influence people to return for their next mortgages. Increasingly, marketers and loan officers know exactly who is listing their home for sale, what engagement should happen next, and who on the originator team should activate to help serve the potential homeowner’s specific needs.

Greater Influence on Referrals

Real estate agents are often the first point of contact for borrowers, and they usually control the referral to lenders they trust. Agent relationships are bread and butter players in the network of any good purchase loan originator.

But what if an agent didn’t refer someone who worked with an originator before?

Lenders are beginning to catch non-referrals through credit monitoring. Because price range is a key part of an agent’s search parameters, and price range usually is tied to mortgage payment and rate in the homebuyer’s mind. To gather that information, homebuyers shop lenders when they apply for credit. Lenders are using new technology available today to engage past borrowers, offer education and rate options, and regain their place as the borrowers’ go-to in this step, whether it’s to purchase a home or to access home equity.

Serving Equity-based Borrowers

Homeowners know the window is closing on the chance to use their equity for renovations, debt consolidation, or surprise expenses. This presents an opportunity for lenders to educate customers about their options and build trust.

“Tappable” equity, though, is always a moving target as home prices rise and fall. This makes segmenting borrowers who have enough equity to cash-out, or to obtain a line of credit, a perpetual, manual task. Often the work involved derails any marketing project to engage these borrowers with personalized messaging.

Lenders are now using automated tracking and engagement to overcome the practicalities of serving these segments. They also are becoming very tailored in their messaging. For example, people who’ve just sold or purchased a home spend four times as much as non-moving owners and twice as much as buyers of existing homes — on items such as appliances, furniture, and home improvements. Homeowners need to know that their lenders can help them finance these purchases, which presents another opportunity to educate.

The key is data transparency

Hundreds of mortgage originations are waiting in customers’ banking data. The ability to use that data to serve pressing financial needs will contribute to the performance of mortgage industry profit leaders in the coming years as we navigate an increasing rate environment.

For every 50,000 contacts monitored in a mortgage database, lenders discover nearly 1,250 additional mortgage opportunities per year, according to lender data gathered by Total Expert. That level of increase in loan originations can translate to nearly $13.8 million in revenue growth. At a time when every lead is critical, lenders must take advantage of these opportunities.

Technology can do much more than identify leads. It also can reduce overhead and marketing costs, something that financial institutions may need to consider in the coming years. Mortgage leads can cost upward of $1,000 per loan. For 200 new originations acquired by lending technology, most of that cost is saved. Those savings, multiplied across an entire contact database, can activate top-line growth and higher profitability.

With such significant opportunities in originations and profit growth, mortgage originators have a clear incentive to solve their retention challenges using new data-driven technology. And even bigger upsides await in relationships. When customers see their lenders working to educate them and to provide options that meet their needs, a deeper connection is created, and customers are more likely to turn to their lenders for future financial needs throughout their lifetime.