Target Group has called on lenders to treat mortgage servicing as a key part of their business, not just a cost to be managed.
With 1.8 million mortgages set for renewal in 2025 and high levels of customers switching providers, Target Group said lenders need to shift their focus from just originating loans to looking after customers after the deal is done.
90% of the customer relationship happens after a mortgage is signed, so servicing should drive loyalty and long-term profitability, according to Target Group.
The company also pointed out that acquiring new customers can be up to five times more expensive than keeping existing ones, and a 5% increase in retention can boost profits by over 25%.
Target Group warned that ignoring the servicing stage could lead to lost profits.
Melanie Spencer (pictured), growth director at Target Group, said: “With lending targets to hit and tough competition, there’s no question that customer acquisition remains absolutely critical.
“But lenders must also consider what happens when the ink is dry and the keys are handed over.
“We have to challenge the mindset that the mortgage journey ends at origination.”
Spencer added: “There is massive untapped potential in mortgage servicing to drive customer retention and profitable growth.
“With high mortgage maturity and high churn, it’s a clear wake-up call for the mortgage market.
“It requires lenders to re-think their post-origination strategies – moving away from just statements and arrears and focusing on building relationships, earning trust and delivering long-term value.”
She added: “Today, smart servicing leverages emerging technologies to transform the experience into something that is proactive, personal and ultimately profitable.
“To keep seeing servicing as a cost centre is a huge mistake and one that if not corrected will leave lenders lagging behind the competition.”
