The mortgage business must overcome challenges that many other industries do not confront. Chief among them is building a base of loyal, repeat customers in an increasingly competitive market.
The average client takes out only a handful of mortgages in their lifetime. The odds of having repeat business is low. This twice or thrice in a lifetime financing experience means that mortgage originators are interacting with clients for short bursts of intense collaboration, making it harder to establish the type of rapport that comes over time.
Compounding this is the fact that the average new mortgage balance is $244,000, according to the Consumer Financial Protection Bureau. And borrowers are increasingly relying on online data to research and seek mortgages.
These factors tend to drive borrowers to narrow their focus on the lowest mortgage rates that appear at the top of search-engine results. This leaves many originators in a precarious position, especially given trends and the shifting behaviors of borrowers online.
A changing borrower
While acquiring a mortgage is not an everyday purchase for an individual borrower, it continues to be the top selling product for financial institutions. Those institutions are in heavy competition to secure qualified clients with the highest intent to purchase.
How can mortgage originators overcome these obstacles? Mortgage originators can capture untapped leads if they dare to compare themselves to the competition.
While older generations knocked on their neighborhood bank’s front door to secure a mortgage, this next generation of homebuyers is different. They expect their mortgage-buying experience to be completely online.
And it better be easy and fast. According to a study conducted by Velocify, 48 percent of mortgage borrowers now find their lender online, compared to just 13 percent a few years ago.
Blame it on the millennials. According to the National Association of Realtors, millennials made up 36 percent of homebuyers in 2017. A similar report found that about half of home loans in 2017 were taken by homeowners under 45 years of age.
So how do you reach these influential, high-intent customers? To be successful, mortgage originators must engage borrowers at the critical moment when they are ready to buy.
Simple, right? Maybe you run a cross-sell campaign to existing clients. Or you invest millions of dollars in a brand refresh. With all things being relatively equal from a federal interest rate point of view, how hard could it be to close those new mortgage sales?
As a financial pro, you know it’s very challenging. Brand loyalty continues to wane, mortgage rates are not the only factor in the decision making process, and the increased reliance on third-party comparison sites is driving new levels of transparency in the lending process.
A recent study by Natural Intelligence uncovered additional new trends around the mortgage selection and procurement process. The key takeaway is that to win over high-intent borrowers with low brand consideration, mortgage originators must dare to compare.
Increasingly, clients want to make an informed decision. To do this, they need to know how each mortgage originator compares with the others, evaluating features and the fine print, as well as feedback from unbiased third parties via comparison websites, reviews and recommendations.
This shift in borrower behavior represents a significant opportunity for financial institutions. Here’s why. When reviews are positive and features are easily comparable, borrowers are increasingly open to purchasing from brands that are new to them.
Make the list
Recommendations for top products and services are meaningful to clients. The Natural Intelligence study found that for comparison websites, the top listing converts at a rate 27 percent higher than the second-place listing, and that second-place listing performs 61 percent better than lower-ranked products.
That’s not to say lower-ranked brands can’t compete, as they do fare well. It’s the financial institutions that are nowhere to be found on comparisons sites that face the steepest challenges when borrowers are looking for mortgage information.
Think about your financial institution. Go now to your favorite search engine and type in “best [your product category]” or “top [your product category]? Is your brand featured in the first few results? If not, you have to apply a new marketing strategy to tap into those high-intent users.
Here are three actions mortgage originators can take to better compete.
Address changes in online consumer behavior. Online research, including reviews and comparison sites, has become a critical step for these high-intent consumers. Don’t be afraid to be compared to your competitors because it’s happening whether you like it or not. Reviews also give you a great opportunity to engage with your users and receive critical feedback that can inform future business and marketing decisions.
Create a comprehensive paid-search strategy. Nonbranded mortgage keywords are among the most expensive to bid on in terms of cost-per-click search-engine advertising costs. They also can be the most effective. Search volume for nonbranded mortgage terms, including phrases like “top 10 mortgage providers” or “best mortgages,” is likely to be more robust than it is for branded mortgage terms, like your company’s name. Find the balance that works for you, but you can’t afford to overlook nonbranded terms.
Recognize and respond to the needs of high- value, high-intent mortgage borrowers. Online mortgage buyers are looking for value and a seamless online experience. With 80 percent of U.S. consumers willing to pay more for a better online experience, there is a tremendous opportunity for lenders to capitalize on the fast-growing, high-intent borrower market if they can meet borrower needs.
Companies that want to generate more online traffic and convert more users must be willing to share more information with third-party websites, create a seamless online experience and do their best to be ranked and reviewed on trustworthy lists.