Data-Driven Segmentation Helps Banks Go After the Right Mortgage Candidates with Speed
Proactive approach reveals consumers looking for home loans and who among them may present the lowest risk for banks.
We’re in the middle of the summer home-selling season, and — for the first time in several years — consumers have warmed up to the idea of purchasing new homes. Nearly three-quarters of respondents to a recent national homeownership survey said now is a good time to buy.
The poll, conducted by Ipsos Public Affairs on behalf of Wells Fargo, asked respondents what steps they would take when considering applying for a mortgage. Online research was the first step for 29% of respondents. Talking to someone at their bank was the first choice of 14% of respondents.
It’s encouraging that banks ranked above other sources of information, such as getting guidance from a family member or a financial adviser. But banks aren’t consumers’ first stop, and that means rival banks and financial institutions have plenty of opportunity to woo away your top mortgage candidates before they even contact you.
One solution, said James Frasche, Property Data & Analytics Leader at Equifax, is to be the first to know who those prospective borrowers are — and to act on that intelligence. “In today’s market, it’s critical for lenders to obtain a deep understanding of consumer needs and behaviors to quickly find and close high-quality loans — while also providing a great customer experience,” Frasche said.
This proactive approach, driven by data analysis, offers insights into everything from which banking customers are likely to be looking for home loans to which prospective borrowers potentially present the lowest (and highest) risks.
“Your bank already knows its profile criteria — in other words, whom its ideal home loan borrower might be. With the right third-party partner, a bank can develop its own list of prospective borrowers,” said Frasche. “For example, lenders can leverage credit and property data from a trusted source to help identify mortgage leads that meet their criteria.”
Predictive indicators may include approaching final loan payments, increased credit activity, recent inquiries on a new line of credit or recent address changes. Combine that with property listing information, and you begin to get a clear picture of who’s in the market for new or additional home credit.
“At Equifax, we can help further advance a lender’s targeting by applying our proprietary scoring system to rank prospects,” said Frasche. “And the more ideal borrowers rise right to the top of the list.”
Applying advanced scoring can help financial institutions predict a consumer’s propensity to open new or additional home credit and also helps weed out less significant prospects. Scoring also can enable banks to move quickly in the fast-growing mortgage sector, while helping to mitigate risk.
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