Technology is changing. So is the competition and consumer preferences. What do the new digital mortgage technology trends look like? What will it take to stay in business and win in the months and years ahead?
The mortgage industry and home loans are going digital. What competitors are doing and how they are manipulating their position in the market is morphing every day. Here’s what to watch for, how to leverage new tools, where the room for disruption is, and what it will take to lead in the loan space of the near future.
Here are just some of the ways the business, demands of borrowers and tech is changing things.
One of the big takeaways from this year’s Digital Mortgage Conference was the need to integrate services, and to offer a more cohesive experience for home buyers. We recently touched on this in our report on Zillow’s new additions and combination of home buying, mortgage lending, and property management. In the case of Zillow, the company is working on super thin profit margins, with the hope of making up for it by making money on every part of the real estate transaction, and increasing transaction volume. They’re looking to grow horizontally rather than vertically by covering as much of the home buying experience as possible.
If you won’t become a one stop shop yourself, consider what strategic partnerships you can build to offer comprehensive and seamless service to home buyers and refinancing borrowers. If not for the profit and competitive pricing, for providing a better user experience.
When it comes to real estate sales we’ve already seen a growing number of Realtors using FaceTime, Skype, Google Hangouts and other video conferencing tools to connect with prospects, host virtual open houses and showings, and to provide on-demand service at a distance. Even if customers are just a few blocks away.
While it may take longer to incorporate this type of service in an organized and measurable way into the mortgage loan business, it’s not far away.
In the meantime, we are already seeing more loan officers and lenders using text messaging and online live chat features to provide on-demand service. Consumers may be more reluctant to hop on the phone and call, or give up their email addresses, but they like text and online chats that can give them live help on the spot.
We’re not too far away from all digital mortgages. Some may be far in the lead on this. Most are still struggling with online 1003s. Not all borrowers will want to do everything online, without talking to a real human at some point, but many might prefer it. You can buy a home online, get an auto loan online, handle your healthcare and investments online, and do all your work online. Why not get a mortgage too?
An effective digital system can remove a lot of the emotion that derails loan applications in underwriting, and may increase closing ratios.
Some big changes are happening in searches for mortgages. People looking for home purchase loans, refinances and home equity lines of credit are using new tools and terms to find the help they need…
Not only is the majority of borrower searches happening on mobile devices, but more leads are using voice searches and voice assistants to find things. They are now using terms like “near
me” and “similar to,” and more long tail search terms than ever before. Unfortunately, most mortgage marketers are far, far behind these trends. So far, that they aren’t even in the same
ballpark as their customers.
These customers are using Siri, Google Assistant, and a variety of smart home technology devices instead of typing their queries into a search engine. This will separate which mortgage companies get found and don’t, as well as which are trusted. Business listings need to be claimed and website SEO needs to be adjusted to account for and capture this new direction loan originations are coming from. Given that simultaneous multi-device use is even more common, savvy mortgage pros need to create a seamless presence between these interactions. For example; they might see your YouTube ad on their TV. Then ask Google Home to find a branch near them, and then turn to their phones to view reviews.
Master this change with a more diverse range of ads, cultivating more online reviews, and a fresh keyword audit and research to identify the best terms to work into your site, blog and ad targeting.
Look at the massive success of SoFi and Fundrise who effectively crowdfund mortgages and loans for home buyers and investments. People are sick and tired of the big old banks who have done them wrong again and again and again. At every chance they get they are looking for an alternative they can trust. That includes for money transfers, auto loans, business loans and more. Why not for mortgages too?
This is also proving to be an attractive method of investment for individuals who don’t want to give up all the profits to the big banks, and who want to help others get financing for their homes.
With everything else going digital, mortgage loan officers and lenders need to be embracing more modern marketing practices as well. Email, Google Ads and social media marketing may all be a part of this.
Yet, the most significant and meaningful shifts are being seen in personalization and user experience. Too many are trying to use modern marketing tools, but with an old school mindset. What consumers are looking for is a unique, custom experience that resonates and is made just for them.
These tools and technology are out there. They just require effort and investment.
One of the most valuable, yet controversial and delicate parts of this is targeting. Mortgage professionals and companies have more power to target and connect with with their ideal customers than ever before. Using this data, can help serve borrowers better, and reduce marketing costs. Yet, HUD has already hit Facebook with a lawsuit for allowing real estate companies to use these targeting tools. Actions the government say are discrimination. Expect there to be a substantial trickle down effect of this regulatory push. The pictures you use, words you use, marketing channels you use, and filters you use for marketing could all come back to bite you as breaking Equal Housing Opportunity laws and Equal Lending laws. Be careful.
One lender seems to have finally stepped up with a loan program for the gig economy, for refinancing houses. Yet, virtually the rest of the industry is still in the dinosaur age when it comes to loan programs that will actually work for almost half of the population, and as much as 80% of workers in the next few years. Unless there is massive change, everyone in the industry is going to be fighting over just 20% of the potential business. The odds of winning customers in that fight, aren’t going to be good.
Somewhere between 40% to 60% of workers are spending at least some time working remotely. As many as 800 million jobs worldwide are expected to be replaced by tech in the next 10 years. What we have then are flexible freelancers who may have 100 employers or 1099s a year, highly volatile (but strong) incomes, and many of whom are ripe to become homeowners and real estate investors.
Whomever can dominate this space has a massive chunk of the industry to win.
Many of the above mentioned freelancers and remote workers are experienced mortgage professionals, salespeople, loan processors and underwriters. Despite the fact that many banks and big funds do a lot of outsourcing, and mortgage businesses have been run virtually for over a decade, many are still weighed down by bricks and mortar and hefty overhead. Unless small businesses, branches and teams can operate leaner, with better profit margins and scalable models, they’ll get taken down the first time the market flinches again or there are regulatory changes that alter the types of loans that can be made.
While overall credit quality out there seems to be improving greatly, especially with the recovery from 2008, credit profiles have changed over the last 12 years. Many have been reluctant to use credit, student loans are a huge issue, and more data is available on alternative credit. Yet, the new breed of digital nomads also means millions who travel virtually full time and who are not only self-employed, but who don’t have rental history beyond hundreds of hotel receipts. We could also use new underwriting models to account for these factors and help them become property owners and real estate investors.
Follow up is more important than ever. Consumers can now see dozens of mortgage lender options in moments. Those who are really qualified and ready will keep hopping until someone follows up. Fortunately, the tools to do this are becoming more and more efficient for loan officers and brokers too. Email autoresponders, robust CRMs with call reminders and integration with virtual phone systems, text marketing, and integrated social media dashboards all make this fast, easy and more automated than ever. It’s just about making the decision to use them.
Perhaps most important of all are online reviews. Without them there is no way for borrowers to tell if they can trust you. Constant monitoring and managing reviews and online comments about your business is important. Yet, Dr. Amir Baluch who is the founder behind Review Ninja points to the data that shows the best reviews come from asking your clients for them and soliciting reviews from those who aren’t in the habit of leaving them, versus just leaving it to chance. Automate this as much as possible using surveys and follow up emails.
New technology and trends are changing the future and present of the mortgage industry. In addition to the above this means e-signing capabilities, new uses of data, and more. Somethings will remain the same. Like desire for service, custom tailored lending solutions and the need for trust. Though to deliver on these expectations and the demands of the new landscape different digital tools and processes need to be used. It is those who get great at digital mortgages, and being able to deliver a personal experience in the Facebook era that will have the privilege of serving the most borrowers.