Are You Ready for the Online Lending Surge?

MAR 19, 2014 10:38am ET
Comments (9)

If you occasionally wonder how many online borrowers are out there, check out Fannie Mae’s recent report, “Technology Use in Mortgage Shopping.” While the study results focus primarily on the differences between high-income and low-income borrowers, what caught my attention was the overall growth in online mortgage activity that was cited in the report.

For example, among borrowers who got a mortgage within the past three years, more than half—51%—looked for a lender online. That’s a jump from 35% of borrowers who were seeking a mortgage more than three years ago. More interestingly, perhaps, was that 46% of recent borrowers obtained a mortgage quote online, up from 29% among borrowers three years prior.

Considering that spring home buying season is upon us and that this year’s purchase loan volume is expected to rise (albeit modestly), I feel it’s safe to assume we will see a record number of online shoppers in 2014. If you haven’t considered online leads as part of your sales strategy before, here are a few thoughts to consider:

The leads are getting better. In the past, online leads did not convert well because of their poor quality, but this is changing. Lead providers like LendingTree, Zillow and others have improved the quantity and quality of data they collect from potential borrowers. Lenders today can buy online leads that include everything from a borrower’s credit score to a host of other data that can be used when it’s time to start the application process.

Online leads keep pipelines full. Even a veteran loan officer, with a large database of customers and a strong referral network can still experience the occasional drought in sales. By supplementing your team’s current lead generation efforts with a steady supply of online prospects, you’re assuring that everyone has plenty of selling opportunities and the business is operating with maximum efficiency.

The technology is accessible. The tools required to buy, aggregate, score, distribute and respond quickly to online leads are no longer affordable to only the largest financial services companies. In fact, if I was running a retail mortgage shop, I would use a lead management platform to add a front line, consumer direct capabilities to my business. My reps could make initial contact with online prospects to get the ball rolling, and then distribute them to the loan officer who is most likely to close the deal. In fact, some lenders are already following this strategy.

A word or two of caution about online leads: The whole reason borrowers shop online is to save time. Today’s “Generation Y” or “Millennial” borrower is unlikely to walk into your branch office to apply for a loan, and when they go online, they won’t be willing to wait days or even hours for a response. They want help now and you’ll be judged on how quickly you respond.

At the same time, online borrowers can require just as much nurturing as any other prospect. Don’t discount online leads just because a prospect isn’t ready to pull the trigger right away. The trick is to respond fast and stay with them. For this reason, technology that helps lenders qualify, distribute, respond and follow up to leads quickly and consistently is a crucial piece of your online lead strategy.

If you’re thinking about how to go after the coming surge in online leads, keep Fannie Mae’s survey in mind. Nearly half of your potential customer base is looking online. Are you?

Kelly Booth is the director of the mortgage unit at Velocify, bringing more than 25 years of experience in sales, marketing, management, strategic planning and product design in the financial software industry. She possesses a solid understanding of the mortgage and banking industries, the overall mortgage lifecycle and the technologies that support the loan process.

Comments (9)
Online Mortgage lead generation has been around for many years. Sure, today the data is better but the incubation and nurturing is the key. The Loan Officer needs to be well structured and organized to increase the pull through of this data.
Posted by RON A | Wednesday, March 19 2014 at 1:20PM ET
There are so many liars on the online pay-per-click type lead generation portal sites and traditional lead generators guarantee they only send out the same lead to 3 lenders is total bull. It's nearly impossible to compete unless you're willing to crawl down in the gutter with the other duplicitous lenders.

This article would have been true 3-5 years ago, but now, I see no value to online leads.

Posted by | Wednesday, March 19 2014 at 2:10PM ET
The lead generators and the lenders that work with them are the dark world in this business. Lending Tree had all of its patents declared invalid last week in the lawsuit with Zillow, it will be interesting to see what happens now that every lead generator will be selling "let lenders compete for your business".
Posted by | Wednesday, March 19 2014 at 6:02PM ET
I have never had a quality lead come from the web. I have had thousands of dollars in expenses and telemarketers wasting my time
looking to sell me stuff and costing me pay per clicks... That and dead beats who are sitting at home with no job and nothing to do...

Lending Tree, Lions, Quicken, etc... sell the leads they don't want and when you invest your time and money... there is no loyalty either...

If you are not a big household name, then stick to your referral sources and save your money.

If I am wrong let me know if you are a lender or a lead sales company... I probably guessed right! Keep your bogus leads and get a real job.

Posted by Mike H | Thursday, March 20 2014 at 12:52AM ET
If you haven't ever had a quality lead come from the web, this could be a sales skill issue not a lead issue.
Posted by Anthony C | Thursday, March 20 2014 at 10:49AM ET
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