Credit Risk Insights

Pinpoint the Strongest Mortgage Prospects and Get There First

Senior Director, Market Planning, Real Estate
LexisNexis® Risk Solutions

Prepare for shrinking mortgage demand

The housing market has never been hotter. Homes are selling within days—and sometimes hours—of coming on the market. And home values in nearly every U.S. city are soaring, with many homes selling for well over asking price. The mortgage market, however, is losing steam.

The number of applications is declining. And lenders are preparing for mortgage demand to cool even further in the coming months. The flash flood of refinances is receding, as most homeowners who were economically incentivized to refinance have likely done so by now.

At the same time, over a million homeowners are in forbearance after losing their jobs from COVID-related shutdowns, and investors who buy jumbo mortgages in bulk have withdrawn from the market. The anticipated decline in mortgage volume has begun.

How will this tightening of the mortgage market affect lenders? A reduced pool of anticipated mortgage applicants means originators need to explore alternative ways to stay ahead of competitors and safeguard their profits.

Differentiate the curious from hot prospects

Loan originators purchase thousands of leads each month from online property value and mortgage rate shopping sites. Some leads are good and worth pursuing, but many can turn out to be time-burners.

Cherry-picking the winners isn’t easy. These lead-generating sites get plenty of curious searchers who enjoy viewing the inside of other people’s houses but may have no intention of making a home purchase in the near future.

Historically, lenders use multiple methods to segment and prioritize opportunity. That gets costly and may not always be effective. And though the reports can identify who, from a financial perspective, could make a good potential customer, they may not be able to tell you whether those prospects are in the market ready to buy.

Traditional list segmentation methods may not contain enough information that could help qualify leads. Consequently, originators may be wasting resources by pursuing many leads that won’t ever convert. They need an alternative approach to reduce costs, increase efficiency and improve ROI.

Unique data to prioritize leads

Originators can go beyond traditional data and look to empirical data to stratify leads and home in on the best prospects. Additional marketing data can paint a more extensive picture with constructive information not only about the individual, but also about their household, relatives and associates.

With the right information, lenders can eliminate those prospects who aren’t good prospects. Equally important, they can identify those consumers who are good quality leads and get to them quickly—before their competitors do. Originators can also use these added details to pinpoint people most likely to respond to marketing campaigns. They can even tailor offers to prospects based on specific attributes.

Alternative data fills the gap

Good prospects are hiding amid the hundreds of thousands of leads purchased by lenders. But without additional data to stratify leads, mortgage originators may not be able to identify them. They don’t know where to focus their energy. Next-generation alternative marketing data combined with proven linking analytics delivers a more extensive view of prospective customers. When originators have a more in-depth identity profile, they’re able to:

  • Improve targeting accuracy
  • Tighten operational efficiency
  • Create customized messaging
  • Refine and focus marketing spend
  • Maximize response rates/ROI
  • Reduce the costs of customer acquisition

Getting the most out of online leads

The lending industry is changing with refinance applications on the decline. Online leads are necessary fuel for an originator’s sales pipeline. But they offer little benefit when prospects can’t be qualified. To increase conversions, originators need more information, critical details that help them home in on the best prospects.

Alternative marketing data that provides a more robust understanding of potential customers can be the competitive edge mortgage companies need to ensure profitable growth in the coming months and years.

This document is for informational purposes only and does not guarantee the functionality or features of any LexisNexis® Risk Solutions products identified. LexisNexis Risk Solutions does not warrant that this document is complete or error free.

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LexisNexis® Risk Solutions provides expanded customer insights to help organizations refine marketing strategies, improve risk assessment and grow their customer portfolio with confidence. Discover our credit risk solutions to learn more about how we can help you unlock more growth opportunities with alternative data.

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