The recent macroeconomic events are having an impact on lending trends. As a lending platform, CreditSnap processed well over 170K loan applications since its launch in January 2019.
With the Fed lowering rates, and the number of people working from home substantially increasing, consumer lending has undergone some seismic shifts.
Recent analysis and trends point to borrowers being focused on savings they might realize immediately. To many, this involves refinancing to lower their monthly expenditures. We will be examining these trends using three distinct data points today.
Google Trends helps us understand what consumers are looking for. In this case, we looked for the searches using “refinance” as a keyword. As the chart below illustrates, we can see the intent and search activity for “refinance” increased almost 4-fold in February 2020 in comparison to a very consistent trend pre-pandemic.
Application data from the CreditSnap platform reinforced this trend. The chart below represents the number of borrowers landing on application pages of CreditSnap’s customers. There has been a near 70% increase in refinance application volume in months prior to COVID -19 being declared a global pandemic.
But are the incremental loan applications of bad credit quality? The answer is NO. Analysis of the average applicant’s Credit Score suggests that current credit score averages are not very different from historical averages seen on the CreditSnap platform. This is not surprising since borrowers across the credit spectrum would be thinking about savings in the current economic environment.
Who can benefit from these trends?
Lenders that are positioned well with a streamlined online lending process are set to reap the most benefit from these trend shifts. With your borrowers being told to stay in place and reduce public interactions, how do you make sure they have access to your product? Even more importantly, how do you keep them from going away to a fully online digital lender?
Responding to these trends involves conducting more of the lending process via digital channels and offering a borrower experience that can compete with the fintech lenders. To compete, a compelling “No Credit Impact” message is helpful in promoting borrower engagement. Once engaged, a low friction application process like that in CreditSnap helps reduce abandonment.
Several of our customers were able to adapt their lending operations to a remote work from home environment in under three days. The cloud based and fully secure CreditSnap platform helped them make the transition with more confidence, and borrowers embraced the fully digital experience.
What are the key ingredients of a good lending system that can facilitate this?
- A lending system that can adapt and move with you
- A lending system that aligns your interests with your borrower’s needs (with a “No Credit Impact” experience)
- A lending system with state-of-the-art security protocols (And thereby remove security concerns in processing loans from remote work-from-home environments)
- A lending system that lets you quickly adapt your credit policy and rates to a dynamic macroeconomic environment
- Most importantly, a lending system that does not cost you an arm and a leg