The impact of stubbornly high interest rates is cascading throughout the U.S. housing and mortgage markets, likely thwarting the hoped-for strong 2025 growth in mortgage originations and refinancings. So strategic mortgage lenders and servicers will spend this year priming themselves to grab market share and realize other competitive benefits when conditions improve.
For mortgage servicers, the smart play is cultivating current mortgage holders with timely, relevant and informative communications. The goal: Be first choice for refinancings and new loans. A proactive approach also allows companies to respond quickly if customers start falling behind on payments.
Building a durable relationship takes a sharp focus on enhancing customer experience to drive engagement, satisfaction and on-time payments. Better CX increasingly hinges on digital interactions, especially for billing, other customer communications and payments.
Elevating digital experiences sets up mortgage companies for success now and in the future. Digital leadership will make mortgage lenders and servicers more attractive to new customers, who like current customers, want and expect fast, easy and convenient mobile, online and self-service communications, account management and payment options. That’s especially true for Gen Z, who will account for nearly 1 in 4 new mortgage loans, almost the same share as millennials and Gen Xers, in just five years, according to Boston Consulting Group.
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February 4 – 7, 2025 in Dallas, TX
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Mixed outlook
As the industry gathers at the MBA Servicing Solutions Conference & Expo in February, broad economic forces influencing market growth and loan performance will be major topics. Most ratings agencies and industry associations are predicting that 2025 interest rates for 30-year mortgages will stay north of 6%, crimping housing affordability, sales listings of existing homes and refinancing. Additionally, some overextended borrowers are on shaky financial ground as mortgage delinquencies trend up.
While Fannie Mae expects existing-home purchases to rise almost 5% from 2024, they will remain near 30-year lows. A big reason: 58% of Fannie Mae single-family loans carry rates below 4% as of September, 2024, narrowing interest in refinancing and keeping many homeowners from moving. On the plus side, industry experts expect sales of new housing to stay strong and price appreciation on existing homes to slow down.
Although mortgage loan performance was generally strong last year, S&P Global reports that delinquencies started to rise in the second half of 2024. The J.D. Power 2024 U.S. Mortgage Servicer Satisfaction StudySM found that the overall financial health of borrowers had declined sharply and an increasing numbers of mortgage holders were paying their bill after the due date. J.D. Power classified just 41% of borrowers as financially healthy, down from 46% in 2023 and 52% in 2022.
Agile and personalized outreach
To address market and personal financial issues, customer-focused communications and payments are critical for success, whether lenders and servicers aiming to:
- Capture share of this year’s 4+ million originations
- Turn around and/or prevent delinquencies
- Keep existing customers engaged and satisfied.
Out of seven reasons customers choose a mortgage lender, only two are related to price and the rest are related to experience, according to 2023 McKinsey research. What experiences are important? Just as digital mortgage platforms and tools are reinventing key steps in the loan application, underwriting and closing process, mortgage holders expect servicers to offer seamless and streamlined interactions for customer communications, billing and payments.
To deliver this level of CX, servicers need cloud omnichannel customer communications management and electronic bill presentment and payments platforms, putting at their fingertips the control and flexibility to create and execute strategic programs that enhance customer relationships and loyalty. These systems, available as hosted managed services that require little internal IT implementation support, also digitally transform and automate much of the billing and payments processes to improve operational efficiency and productivity.
How tech enables excellent CX
With CCM platforms, companies can cater to each customer’s preference for any combination of mail, email and text on a single system. Some CCM leaders also offer digital and print production and delivery to integrate and simplify the entire process for clients. CCM applications allow companies to:
- Easily develop new borrower communications using standard document templates, shared content and business rules.
- Upload a single data file to push multi-channel communications that merge elements to customize each statement, email, or welcome kit with messaging, financial aid options, state-specific compliance disclosures, refinancing offers, and other content.
- Review documents, generate proofs for sign-off, and make disclosure changes in real time avoiding the back and forth with your statement vendor.
- Track distribution, run detailed reports, create audit trails and archive documents with real-time access.
- Automate USPS services that leverage intelligent mail barcode (IMb) including Address Correction Service (ACS) and Mail Tracking of both outbound mail and inbound lockbox payments, all from a single communications platform.
To manage the full cycle of billing and digital-first payments, servicers can combine their CCM systems with an EBPP solution that lets customers manage accounts and make payments through the servicer’s branded payment portal or IVR system. When it comes to payment options, customers are looking for both one-time payments and recurring automatic deductions.
CCM and EBPP platforms can transform CX, especially by delivering in-demand digital options. Choice and personalization in mortgage loan billing and payments are foundational to promoting on-time payments as well as building trust and loyalty. While pricing is important, McKinsey research show that customized experiences can be the deciding factor for many borrowers.
Contact us to learn more about CCM and EBPP solutions for mortgage servicers that drive better CX.
