Time is money. Truer words have never been spoken, especially when it comes to loan closings and improving pull-through rates, a key metric for success of any lending institution. Unfortunately, when most people think of loan applications, words like “long,” “drawn-out” and “inefficient “ are words that may readily spring to mind.
A lot of lenders are looking at technology as a way to change this perception of the process and taking a closer look at messaging. With so many people using messaging as a daily communication tool, it’s easy to see why 66% of consumers prefer texting as a way to engage with companies. Messaging is helping lenders deliver faster, more convenient service to borrowers through messaging while reaping the benefits of this preferred, more cost-effective, method of communication. Let’s take a look at why messaging has become so crucial within the lending industry.
Improve Pull-through Rates with Messaging
It has been a seller’s market since the housing recovery began. A shortage of inventory has left a lot of buyers competing aggressively for homes. This inventory strapped, competitive market has lengthened the home-buying timeline to account for buyers losing bids to other, highly motivated, buyers. Still, lenders have seen around 40% of the loan applications they receive go to closing.
40% may seem like a respectable number, but examining the hard costs involved in each transaction may make you reconsider. It costs on average about $8,000 of hard costs to move people from loan application to closing and pre-approval processing can account for up to $2,000 of those hard costs. When you think of the 6 out of 10 people who never close, the amount of money that walks out the door with them quickly adds up. It’s easy to see why improving pull-through rates can substantially impact the bottom line.
Let’s look at three ways messaging can help improve pull-through rates.
1. Gain buyer loyalty
Industry research indicates that homebuyers may expect to wait two weeks for a loan pre-approval, at least 30 – 60 days just to find a home and an average of 40-50 days to close a loan after their offer is accepted. One often overlooked risk that some lenders have found of this lengthy sales cycle is that it opens the door for other lenders to lure borrowers away, putting the 40% closing rate further at risk.
Staying engaged with borrowers throughout this long, complicated process can help alleviate the need to shop around for other lending options. Assisting lenders in becoming the trusted advisors that home buyers need and want throughout the buying process can solidify the borrower’s trust in the lender and cement the relationship.
First time home buyers and millennials may need extra care, and attention and messaging is key to reaching these buyers. Millennials tend not to be as brand loyal as other generations so if they feel they’re not getting the information they want as quickly as they want it, they won’t hesitate to find another lender who’s willing to provide it.
2. Expedite the transmission of information
A lot of first time home buyers are surprised at how long the process can take and what is involved. According to the National Association of Realtors Millennials and Gen-Y (Buyers 36 and younger) make up the most significant share of home buyers, and 66% of these buyers are also first-time home buyers so their communication preferences can’t go ignored.
Delays in Income verifications, credit pulls, and other documentation can substantially delay a closing. Messaging greases the communication wheel with buyers to help move the process along. Unlike phone calls that go unanswered or emails that can get caught in spam filters or fall too far in an inbox to get urgent attention, borrowers receive messages directly to their phones and read them within three minutes of receipt.
The new generation of borrowers prefer text messages over calls and emails and will be more likely to open a text message vs. answering a phone number that’s not familiar to them. Messaging has a 98% open rate and 30% response rate which means borrowers can easily see and address important notifications and requests. Sending requests for documentation, or asking questions via messaging ensures a more frictionless closing process.
3. Gain More Referrals and Repeat Business
The average homeowner will move or refinance every 5 – 7 years. Delivering an outstanding loan experience can generate more advocacy and retention for future business. Messaging helps lenders deliver that first excellent experience by improving communication, managing expectations and enabling a faster means for two-way communication between lender and borrower.
Messaging can also help lenders stay top of mind with these buyers. Quiq clients frequently use outbound messaging as a way to keep in touch with clients and lenders have plenty of opportunities to provide customers with quick reminders and messages to keep the relationship going:
- a message on their birthday or anniversary
- market updates as they near the time they may be considering downsizing
- or a quick reminder that their home equity can assist in paying for their kid’s college education.
Communication is crucial to setting and managing expectations, especially among new home buyers and Millennials who may seek more guidance during the process. Communication that is fast and convenient is critically important to these buyers, which is why text messaging has become such a highly preferred method of communication with lenders.
An investment in technology is no longer a process improvement but a competitive necessity for lending institutions. Quiq Messaging is helping lenders connect with borrowers in a convenient, preferred way through mobile, web, and social messaging. If your institution is ready to improve your pull-through rates, request a demo.
Quiq makes it easy for customers to contact a business via Messaging, the preferred channel already in use with our friends and family. With Quiq, customers can now engage with companies via SMS/text messaging, Facebook Messenger, Web Chat, In-App,and Kik for help with their pre-sales and post-sales questions. Learn more about Quiq today at quiq.com.