July 25, 2024

Building Loyalty in the Age of Rate Shopping

Insights
Issues Facing OriginatorsMortgage Solutions

President Harry S. Truman famously said, “If you want loyalty, get a dog.”

While the 33rd president referenced politics, the quote also applies to today’s intensely competitive mortgage market.

According to the most recent J.D. Power Mortgage Origination Satisfaction Report, nearly one-third (31%) of mortgage customers selected their lender “solely because they offered the lowest interest rate.”

However, more than two-thirds of the respondents (69%) chose lenders for other reasons — including personalized service and the ability to help navigate the mortgage market, according to J.D. Power’s consumer survey from November 2023 (when rates were above 7%).

Only 13% of Homebuyers Loyal to a Lender

In a May LendingTree survey, 54% of homebuyers sought a rate quote from just a single lender. When asked why, respondents provided very revealing answers:

28% — Confident I got the best rate.

20% — Used the lender my real estate agent had a relationship with.

14% — Rushed due to the competitive housing market.

13%  — Wanted to use a lender I’d worked with in the past.

7%  — Didn’t know I could get more than one offer.

Note: April 2024 LendingTree survey of 379 homeowners who didn’t shop around for their most recent mortgage.

While most consumers aren’t chasing rates, the authors of the J.D. Power report said many mortgage loan officers aren’t meeting borrowers’ expectations — with 40% of respondents saying their loan rep “should have been more involved,” up from 29% a year earlier.

How can you compete in a market where potential homebuyers say they value help but are increasingly dissatisfied?

Successful mortgage loan officers strive to show their customers that their institution is more than just a loan provider. Ideally, a mortgage loan officer is a trusted advisor, a problem solver and a partner in their borrower’s homeownership journey.

Here are three ways to demonstrate value to homebuyers in ways that build loyalty and generate referrals.

1. Stay in Touch and Follow up

It’s important to maintain contact with your customer after the closing. The LendingTree survey shows that only about one in seven homebuyers choose a mortgage lender based on loyalty or a previous relationship. Stay connected by following up with a card or email on important dates such as their loan anniversary, their birthday or holidays.

You can also take opportunities to send clients newsletters or market updates via social media. A good example of the type of news you can share is a June report from LendingTree that found borrowers who shop multiple lenders for a mortgage can save $75,000 over the life of the loan. In higher-cost states like California and Hawaii, the savings can exceed $100,000.

Show customers you are interested in a long-term relationship — not just a single transaction — and you value their business and referrals.

2. Communicate Proactively and Frequently

As stated in J.D. Power’s report, a lack of communication is a top complaint of borrowers. Many feel left in the dark, unsure of the status of their loan or what they need to do next — leading to unnecessary frustration, anxiety and dissatisfaction.

Avoid this by communicating proactively and frequently with your customers — from the initial consultation to the closing and beyond. Set clear expectations, provide regular updates and address any questions or concerns as quickly as possible.

3. Solicit and Act on Feedback

Don’t hesitate to ask your customers for their opinions and suggestions. Work to find out what they liked and disliked about your service, what they expected and received and how you can improve. Look for ways to use their feedback to showcase your success by sharing their testimonials, reviews or ratings on your website, social media or marketing materials. Demonstrate your commitment to excellence and continuous improvement.

By doing these things, you can stand out from the competition, earn repeat business and grow your reputation. You can create loyalty with high value and service, not just a competitive rate.

If you’ve recently gained a referral as a result of offering an extraordinary level of service or through your social media posts, email us and share that experience. This is a topic we’ll likely revisit soon, and your peers could learn from strategies that have worked for you.