How to Retain Customers in the Wake of the Refi Boom

A convergence of circumstances — high purchase demand, high home equity, and low refinance interest rates — has gifted mortgage lenders with an unusual opportunity. But this window won't be open much longer. Three key tactics can boost loan officer results during this perfect storm.

The unprecedented, pandemic-related events of 2020 have culminated in a rare and extraordinary lending convergence that’s carried over into 2021: motivated buyers are tapping historically low mortgage rates to gain more purchasing power while sellers respond by increasing home prices.

The lending market has been realizing the results. Black Knight’s recent Mortgage Monitor Report found a whopping $4.3 trillion in mortgages were originated in 2020 — $2.8 trillion in refinances alone — with the last quarter of 2020 seeing a record-breaking $869 billion in refinance lending. In addition, the Mortgage Bankers Association (MBA) indicated that 2020 would be the mortgage industry’s strongest year in originations since 2003, with the average purchase loan amount hitting the highest value recorded since the inception of MBA’s survey in 1990.

Despite Q1 2021’s rising interest rates, Black Knight expects the quarter’s refinance lending volumes to remain near Q4 2020’s  high.

But it’s not going to last forever. In fact, the lending market already exhibits symptoms of an approaching end.

A Shocking Figure:

Since March 4 — when news hit of interest rates rising past 3% — the number of remaining, high-quality refinance candidates shrank by 30% in only three weeks, hitting its lowest volume since May 2020, according to Black Knight.

“When two waves meet, and their crests and troughs align, the resulting energy creates a much bigger wave that’s extremely powerful — something surfers call a ‘double-up’ wave,” said Joe Welu, Founder and CEO for Total Expert. “Right now, a tremendous but fleeting double-up wave in the lending market is gifting lenders with a business boom. That’s why we’re calling 2021 ‘The Year of the Loan Officer.’ But this double-up wave is doing something else, too: It’s putting an extremely strong squeeze on a loan officer’s valuable but limited time and attention.”

Marketing automation platforms designed specifically for mortgage lenders — like the one offered by Total Expert — best enable loan officers to become the efficient, knowledgeable and accessible resources borrowers need.

“Research shows lenders who help a borrower with a key financial decision today — especially those lenders who invest in the customer experience — are more likely to retain that borrower’s business for a lifetime,” Welu explained. “Now more than ever, lenders need purposefully designed marketing automation platforms that empower loan officers to intelligently engage with customers and members in the most meaningful, valuable way while becoming as operationally efficient as possible.”

Three Steps Towards A Stronger Mortgage Lending Operation

By using marketing automation purpose-built for mortgage lenders, Welu asserts lenders can make three immediate improvements to their loan operations — improvements that can help them profit still from 2021’s waning double-up wave.

1. Market to the Right Borrowers

Mortgage lenders need powerful prospecting and lead gen tools they can use to deliver more effective, personalized messages to borrowers more efficiently — all from a single technology platform. Marketers can, for instance, create seamless and multi-channel, multi-device campaigns featuring industry-leading content that engages borrowers at the right time, in the right place. They also can use consumer data and behavioral analytics to intelligently automate marketing messages to align to each person’s unique financial journey.

Lenders leveraging marketing automation in this way deliver more personalized, relevant communications, so borrowers feel valued and confident in their financial future. Consumers using Total Expert, for example, decrease turn times by 20% on average, drive 35% more referral business and receive 16 times more loan application submissions — applications with a consistent pull-through rate of 70%.

2. Improve Loan Officer Productivity

Borrowers seek loan officers who are savvy, trusted financial advisors that give them better service and more insights than others. But loan officers need to be technology-enabled in order to deliver greater value to borrowers in every interaction. Consumer-facing teams, for example, need lead generation and predictive analytics tools to quickly identify the next best action to take for each borrower. Built-in automation further streamlines campaign development for them by minimizing the number of routine processes and manual workflows to be completed.

On average, loan officers supported with the right technology close 5.9 more loans per year than those who don’t. One specific organization grew loan officer productivity by 3.28 incremental loans per year in Year 1, by 4.59 incremental loans per year in Year 2, and by 5.90 incremental loans per year in Year 3. Gross profit per loan also increased 107%, from $1.5 million in Year 1 to $3.1 million in Year 3, according to a September 2019 Forrester study.

3. Deliver Proactive and Personalized Service

With a 360-degree view of unified consumer data, loan officers can deliver better product and service options to borrowers throughout their financial journeys. They can create personalized experiences that achieve greater impact by leveraging actionable data, like a borrower’s contact details and relevant behaviors.

Loan officers providing this kind of exceptional experience are those that, for instance, proactively alert borrowers carrying private mortgage insurance (PMI) when market opportunities arise to eliminate that expense. They’re also those loan officers who deliver a more personalized customer experience with simple yet insightful actions, such as using a borrower’s preferred communication method or demonstrating detailed knowledge about prior mortgages.

“We’ve all heard how it’s easier to retain a current customer or member than secure a new one — we at Total Expert like to call this ‘playing for keeps’,” Welu said. “Until now, most lenders couldn’t ignite and fuel long-term loyalty with borrowers because the data access and advanced personalization required to deliver a seamless, unique experience was simply too hard to achieve. But the right technology partner can enable you to do it.”

According to a Forrester study, lenders that make the three improvements outlined above experienced benefits of approximately $6.1 million in increased revenue over three years compared to costs of approximately $1.5 million. It added up to a net present value (NPV) of about $4.6 million, with a payback period of less than nine months and an ROI of 321%.

Who Will Win?

It’s clear lenders with informed, technology-enabled loan officers are poised to capture the lion’s share of this year’s and future years’ mortgage lending opportunities.

Loan officers who deliver exceptional, personalized service will power growth for lenders that invest now as opposed to adapting to borrowers’ needs. With the right technology partners — ones that provide an ROI in months rather than years—mortgage lenders can capitalize on today’s high demand and build sustained growth for decades to come.

About Total Expert:

Total Expert is a fintech software company that built the first Experience Platform purpose-built for the modern financial institution. The platform enables sales and marketing teams to leverage data to seamlessly deliver products and services relevant to each person based on their financial goals.

Total Expert focuses on the unique compliance needs of financial services organizations that must integrate industry-specific data and applications to deliver a cohesive experience across the consumer lifecycle. For more information visit totalexpert.com.

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