Improving the Return on Investment in Mortgage ...

[Pages:4]Improving the Return on Investment in Mortgage Satisfaction--Driving Repurchase Rates

PROBLEM:

Slowing loan volumes,

customers. The study has identified three solutions that may lead to immediate positive results.

price compression, and regulatory costs

The confluence of conditions in the

SOLUTION NO. 1:

Ask for the business

mortgage industry, such as a slowing

Lenders that proactively approach their

refinance market, stricter underwriting

existing customers regarding refinancing

rules, margin compression, and increasing

their loan have a significantly better chance

costs in origination, are putting lenders in

of retaining these customers than if they

a pinch to build business. In the face of

say or do nothing, which drives customers

these challenges, how can lenders sustain

to begin a mortgage search on their own.

profitable growth?

For financial reasons, lenders may not

wish to encourage customers to explore

According to the J.D. Power and Associates

refinancing; however, by not proactively

CUSMTOoMrtgEaRgIeNOITrIiAgTiEnaDtiSoEnASRaCtHisfFaOctRioPnRSIMtuAdRyY,SMMORTGAGEcLoOmANmunicating, lenders increase the risk of

the answer is simple: retain your existing

losing these customers altogether.

"Lenders that proactively approach their existing customers regarding refinancing their loan have a significantly better chance of retaining these customers than if they say or do nothing."

CUSTOMER-INITIATED SEARCH FOR PRIMARY MORTGAGE LOAN

100%

Refinance current home with current lender; zero additional considered

Refinance current home with current lender; one or more additional considered

82%

Refinance current home with new lender

80%

75%

60% 59%

% of Customers

40%

33%

20%

0% Yes

15% 8%

No, approached by current lender

16%

6% 2%

No, approached by a mortgage broker

Source: J.D. Power and Associates Mortgage Origination Satisfaction StudySM Source: J.D. Power and Associates Mortgage Origination Satisfaction StudySM

3% 1% 1%

Other

A Global Marketing Information Company

J.D. Power Insights

Improving the Return on Investment in Mortgage Satisfaction--Driving Repurchase Rates

An analysis of the factors that lead customers to consider and finally select a refinancing lender shows that the existing relationship between customers and their lender is the primary reason for an "autopilot" response to refinancing, while interest rates become a distant second.

SOLUTION NO. 2:

Deliver a better origination experience, and customers will likely repurchase

In the mortgage business, repurchase behavior is a critical business driver. Ultimately, the final determinant of repurchase behavior is the overall customer experience during the loan origination process. When comparing the repurchase rates among lenders surveyed for the 2012 Primary Mortgage Origination Satisfaction Study in relation to their performance in the 2010-2012 studies, a distinct relationship between the past origination experiences customers PAShTaOvVeEwRiAtLhLtOheRiIrGlIeNnAdTeIOrNanEdXPthEReiIrENreCfEinAaNnDceRdEePcUisRiCoHnAbSeEcRomATeEs evident.

PAST OVERALL ORIGINATION EXPERIENCE AND REPURCHASE RATE

830

Quicken Loans

Average 2010-2012 Origination Satisfaction Index--on a 1,000-point scale

812

794

SunTrust Mortgage

BB&T

ING Bank*

776

U.S. Bank

MetLife Home Loans*

758

PNC Mortgage

Wells Fargo Home Mortgage

740

GMAC Mortgage

Chase

722

Flagstar Bank

Fifth Third Mortgage

CitiMortgage/Citibank

704

Bank of America

686

668

Sovereign Bank*

650

10%

20%

30%

40%

50%

60%

2012 Repurchase Rate

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