Any mortgage lender aiming to compete in 2023 has an online mortgage application. How is that application's performance measured? Good question. Let's take a look at some best practices.
Let's face the cold hard truth: while any given lender can tell you how many applications they closed last year, we'd wager very few have any idea how many total leads it took for them to get to that number.
Now throw an online application into the mix with little to no native performance analytics... And yeah, we can completely understand why these top-of-the-funnel metrics can go overlooked.
But it doesn't have to be that way.
Lenders can get a pretty good idea of how their website and application page are performing by tracking bounce rate, utilizing UTM tracking URLs, leveraging heatmaps & behavior analytics tools, and sourcing reoccurring feedback.
Bounce rate is defined as "the percentage of visitors to a particular website who navigate away from the site after viewing only one page." In our terms, this means they didn't fill out your application despite clicking the "Apply Now" call-to-action. They seemed to be ready, but something deterred them from moving forward.
According to ICE Mortgage Technology's 2023 Borrower Insights Survey, 70% of borrowers choose lenders based on the availability of their online applications. And from what we've seen... most lenders aren't showing off the most inviting welcome screen.
If you haven't already, implement a web analytics tool like Google Analytics. For those already using GA, here's a reminder that Google Analytics 4 (GA4) is replacing Universal Analytics this July. So, navigating to the bounce rates will be a bit trickier than it was before.
For a super helpful walkthrough to locate your page-by-page bounce rate, check out a quick demo at the 3:05 mark of MonsterInsight's YouTube video.
Suppose you're using integrated software as your point-of-sale (POS) and not something directly hosted on your website's domain. In that case, it's not likely that your Google Analytics account will natively track your application data. This is easy to solve so long as the backend of your POS allows for the installation of Google Tag Manager (GTM). This allows you to see if/where users are dropping off on the application.
The average bounce rate is between 26-70%, but aim to be under 40%.
Where bounce rate will tell you what percentage of website visitors left your application without completing it, UTM tracking URLs will tell you where that visitor came from. This granular data allows you to drill down to the specific sources of traffic that referred them to your website.
This is helpful for two reasons: you can gauge the effectiveness of marketing and sales efforts and make inferences on which platforms yield the highest bounced visitors and why.
For example, if visitors from Instagram bounce at 72% but Facebook only bounces at 32%, maybe your target audience on Instagram isn't far enough along in their buyer journey because the demographic is younger - something you've likely considered when crafting your marketing but haven't optimized for by platform.
While this doesn't speak directly to the performance of your online application itself, it will teach you a decent amount about your target audience. It can serve as a good starting point if you aren't ready to build out your existing POS or implement something new.
Use HubSpot's free downloadable template or the Google Analytics Campaign URL Builder. If you're already using HubSpot, you can use the Tracking URL Builder available in the Analytics Tools dashboard.
These aren't the only solutions out there, but they are a few of the most popular ones that simplify it.
We won't get too in the weeds here, but it's worth mentioning as we discuss customer journeys and page-by-page analysis. Tools like Hotjar and Mouseflow give you an overview of how people interact with your pages, including how far down they scroll, what content they skip past, and what buttons they click. You can quite literally watch their mouse movements - it's crazy and super insightful.
For example, if you notice that over 60% of visitors only make it halfway down each page, you know to move your "Apply Now" buttons and lead capture forms up to the top.
This is arguably the most important strategy. There's no stronger driving force to make changes than negative feedback from borrowers. And who is often the recipient of that insight? Your lending team. Build it into your monthly, quarterly or semi-annual review to ask them some of these questions:
You'll be surprised what you uncover... "They don't want to create an account before talking to someone." "I wind up calling them and doing it with them because they have so many questions." "I receive all of my files via email... that's secure, right?"
Remember, this should be the easiest part of your homebuyer's journey - they're just introducing themselves! So something has to give if you're confusing your borrowers and creating a lead flow bottleneck right out of the gate.
Let's say you're a small mortgage bank, and your loan officers are taking in 500 leads per month. Of those 500 leads, 300 (60%) get pre-approved. And of the people that get pre-approved, 120 (40%) find a house and apply for a mortgage. And 108 (90%) of those applications close. So those 500 leads turn into 108 closings - are you following me?
|Number of Leads||500|
Let's say you changed your application's front-end experience to be much more intuitive, conversational, and user-friendly for your borrowers. With that change, you can improve your lead flow by 5%. So now your team is taking in 525 leads because you can capture prospects much easier (and much faster) than before. Here's how those new numbers would breakdown using the conversion percentages we listed above:
|Number of Leads||525|
So instead of 108 closings, you now have 113. Those 5 additional closings, at an average size of $250,000, yield $1.2 million in additional volume each month.
According to the MBA, lenders, on average, make about 342 bps in gross revenue on an originated loan. So that $1.2 million in one month yields $42,750 in additional revenue. And that $42,750 is an extra $12,000 in loan officer commission - in just one month.
Bad 1003s can cost you a lot of money. Make sure yours isn't.
If you want to provide borrowers with a simple yet amazing user experience, check out our point-of-sale LiteSpeed. Within 90 seconds, borrowers give the essential information needed to trigger a new loan within Encompass®. This front-end solution works complementary to Encompass® Consumer Connect, is competitively priced, and can be up and running in as little as two weeks.