Selling a loan isn’t always easy, even in a low-interest environment. Trying to sell a loan when the interest rates keep increasing can feel next to impossible for many mortgage lenders.
Mortgage rates have been steadily increasing in 2022 due to several factors, including record-high inflation. Experts predict that rates will start to lower in 2023, although they are unlikely to return to the same low levels they were before the COVID-19 pandemic in 2020.
High interest rates and the uncertainty of a potential recession are keeping many people from buying a new home or refinancing their existing one. This is making it difficult for mortgage lenders to grow their business or even keep it afloat.
The good news is that it is possible to continue selling mortgages, even in today’s high-interest environment. It’s essential to recognize which technological tools can help mortgage lenders succeed, even in an unfavorable interest rate environment.
4 Ways Technology Can Help in the High-Interest Market
Mortgage lenders have no control over interest rates. So, instead of focusing on those, mortgage lenders should focus on all the things that are entirely within their power as they continue to work on selling loans to new and existing homeowners.
Here are four ways technology can help mortgage lenders survive in this high-interest market.
1. Improve response times
Unlike other commodities that can fluctuate significantly in price, mortgages tend to come in around the same amount from one lender to another.
So, all things being equal, the next most important thing consumers consider when choosing which lender to work with is customer service. New homebuyers aren’t loyal to any lender – they want to work with someone who will answer their questions and help them through the process.
With the acceleration of e-commerce, today’s users expect an Amazon-like experience every time they engage with a website, even a mortgage lender. Thus, it’s essential for mortgage lenders to consider user experience (UX) when engaging a borrower online by using a sleek and intuitive user interface (UI).
The first step in creating an excellent customer service experience is responding to new consumer questions as fast as possible. Responding to inquiries quickly can distinguish a mortgage lender from its competitors. Often, consumers will work with whichever vendor gets back to them first.
Several tech tools can help with this aspect, including mortgage automation tools that can create and send automated responses to inquiries. This ensures that a mortgage lender is the first touch point for a consumer and delivers an excellent customer experience from the beginning. Then, the mortgage lender can follow up with a more personalized response.
2. Leverage an online network
Mortgage lenders need to have a strong network. That network can come from in-person interactions. It can also be built online using networking sites that connect lenders with real estate agents and others who can become partners.
Mortgage lenders can also join professional groups online that connect them with a broader audience. For lenders that are not limited by geography, this can be an excellent way to connect with professionals in a new area who may be likely to make referrals.
The goal is to be the mortgage lender of choice when someone is looking for a referral. The more a lender can build their network, the more likely they are to get referrals. And referrals are more likely to result in sales than customers who walk in cold.
3. Get creative with loan offerings and advertisements
Everyone is aware that interest rates are higher now than they were a few years ago. Yet, people still need to buy and refinance homes. So, instead of focusing on interest rates in their marketing materials, mortgage lenders should discuss the other benefits of getting a mortgage through them when creating advertisements.
Some things to emphasize include customer responsiveness, customer experience, and customer retention. In addition, sharing real-world statistics about how many customers return to a lender can build confidence among leads. Lenders can request online reviews from their current customers to build social proof and demonstrate their ability to provide an outstanding customer experience for homebuyers.
Savvy mortgage lenders can also use technology to target advertisements to distinct audiences. For example, a mortgage lender could create a digital marketing campaign about reverse mortgages targeted at homeowners close to paying off their mortgages. This might mean targeting an older audience instead of focusing on millennials or members of Gen-Z.
4. Optimize a lending tech stack
Today’s mortgage lenders need to be hyper-aware of how they use technology to their advantage. For example, adding technology to automate time-consuming tasks, such as email outreach and cold calling, could save mortgage lenders time and help them close deals faster.
Upgrading technology benefits mortgage lenders because it is not a capital-intensive choice. In addition, one can modernize using technology without paying exorbitant upfront fees.
The best way to optimize a lending tech stack is by doing a tech audit. During a tech audit, a lending company can uncover any redundancies or inefficiencies in its stack. From there, they can determine which new technologies should be adopted and which existing ones should be dropped.
When optimizing a tech stack, mortgage lenders should consider how the digital tools they use improve lead generation and lead nurturing to simplify and accelerate the process of converting leads into customers.
Optimizing A Mortgage Lending Business for Long-Term Success
Things might feel a little in flux right now, but the good news is that mortgage lenders might see interest rates start to fall in the next several months. However, that doesn’t mean they should put off investing in the above four technological upgrades.
The great thing about taking time to optimize a mortgage lending business in a high-interest environment is that the processes and tools put in place today will benefit lenders in the future.
Focusing on improving the customer experience, building relationships with a broader network, targeting a different type of customer with varied loan offerings, and optimizing a lending tech stack will help mortgage lenders grow and succeed in the long term.
The friendly team at LendArch is available to help mortgage lenders identify the digital tools they need to succeed in the competitive market, regardless of the interest rate environment. Contact us to learn more.
As Chief Executive Officer, Tammy Richards brings over 35 years experience in Mortgage Banking, EClose/EMortgage, Robotics/AI/OCR/ICR implementation and more. She has been an executive and has led Nationally at Bank of America, Caliber Home Loans and most recently served as Chief Operating Officer for Loan Depot. She is passionate about and is an expert in the mortgage industry's ongoing tech transformation.
