More online mortgage shopping equals lower servicer retention rates
Consumers increasing their online shopping for homes and loans is a reason why mortgage servicers' retention rates haven't improved much since the downturn, according to a marketing technology firm executive.
"Even though the consumer may be happy to go with their current servicer, that thought process is almost getting hijacked because all of a sudden a consumer sees an ad that says, 'click here, and get a mortgage quote,' or they end up on a website where they are researching mortgage options, and the next thing they know, they're completing a form or getting engaged by other lenders," Mike Eshelman, head of consumer finance at Jornaya, said in an interview.
More lenders have been finding their customers through online searches, according to Ellie Mae's Borrower Insights survey. More recent borrowers also are doing slightly more shopping than those in the past, with 21% of those who got their previous loan less than a year ago considering three lenders. This compares to 17% for those who got their last loan a year or two ago, and 16% who got their last loan three to five years ago.
Mortgage servicers can get ahead of the increased competition by analyzing unique customer data they have in compliant ways, Eshelman told attendees at the IMN Residential Mortgage Servicing Rights Forum in New York.
"We find that servicers aren't looking at all that they might look at," he said.
While traditional servicers generally will monitor payoff quote activity as an indicator of a possible refinance, they're less likely to examine other data that could provide other signs, such as an autopay deactivation, Eshelman said. His company is a compliance and marketing data vendor.
"We speak with a lot servicers and banks where it just seems that they are a little behind the curve on the new data technology that's available, whereas you have fintechs or consumer direct lenders who are focused on new customer acquisition that are pretty progressive with the data," said Eshelman.