A 50% application drop-off rate isn’t just a number;  it’s a message that many lenders can’t afford to ignore.

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When home equity applicants start the process but never finish, it’s more than just lost volume. It’s a clear sign that something in the borrower journey isn’t working. Whether it’s poor marketing, confusing user experience (UX), lack of communication, or outdated tools, high abandonment rates are often symptoms of a larger problem: friction.

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Understanding why borrowers drop off, and what you can do to fix it, is one of the most valuable ways to improve both conversion and satisfaction.

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Let’s break it down.

What’s Considered a High Drop-Off Rate?

Recent industry data shows that average online home equity application drop-off rates range from 50% to 68%, meaning well over half of applicants start but never finish the process. The reasons vary by lender, but the trend is clear: as borrower expectations rise, traditional processes often fall short.

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And it’s not always a matter of intent. Many borrowers who begin an application are financially qualified and genuinely interested. They’re not abandoning the application because they changed their minds; instead, they’re abandoning it because something in the process gave them a reason to hesitate.

Why Are Borrowers Dropping Off?

Application abandonment isn’t about one issue. Instead, it’s usually the result of multiple friction points along the way. And while many credit unions and community banks try to compete on price—waiving fees, lowering rates, or covering closing costs—what borrowers are actually telling us is different: they want fast, not free.

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Here are the biggest culprits:

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1. Poor User Experience (UX)

Clunky online applications, long forms, or non-mobile-friendly interfaces are among the fastest ways to lose a borrower. Many lenders start with confusing steps like selecting a branch or choosing between a dozen loan products, which many borrowers don’t know the difference between. This complexity creates friction and fuels drop-off. If your app takes 30+ minutes to complete, asks for duplicate info, or isn’t easy to navigate on a phone, users will disengage quickly. 

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According to ICE Mortgage Technology’s 2023 Borrower Insights Survey, fewer than 10% of borrowers want a fully digital mortgage process, but the majority expect digital tools to simplify and speed things up.

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Borrowers are often trying to fill out applications between meetings, in the school pick-up line, or while multitasking. The experience has to meet them where they are, meaning clean, fast, and frustration-free.

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2. Lack of Communication

Any communication gap creates uncertainty, and uncertainty kills momentum. A borrower completes the first half of the application, only to hear nothing for three days. Or they upload documents but receive no confirmation. Or they’re unsure of next steps and can’t find a point of contact.

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What’s worse, delays often happen behind the scenes without borrowers even realizing why. Maybe it’s a missing verification step. A manually routed task. A bottleneck in underwriting. Whatever the cause, from the borrower’s view, it feels like being left in the dark.

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Consistent, proactive communication reassures borrowers that they’re on track, and it keeps them engaged from start to finish.

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3. Slow or Manual Processes

If tasks are routed manually, or service orders (like title or flood) require staff to chase vendors or toggle between platforms, the delay gets passed on to the borrower. And they can feel it.

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In a recent webinar, CU Lending Advice owner Don Arkell said “I can walk into your branch, submit an application, and have an offer from a fintech before I even leave the teller line.” 

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That’s the competitive reality today. Fintechs have shown borrowers are willing to pay more for speed and simplicity. Manual processes don’t just slow things down; they create exit ramps for the borrower to abandon your application and finish with a faster competitor.

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4. Trust Gaps

Borrowers expect clarity and confidence, not confusion. If your application doesn’t clearly explain what’s needed, how long it will take, or what happens next, it erodes their trust. This is especially true for credit unions and community banks, where the borrower may already be expecting a more personal, hands-on experience.

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When communication or digital tools don’t meet those expectations, the experience feels out of sync with the brand. And that disconnect can lead to application drop-off, not because of the product, but because of the process.

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What Drop-Off Rates Are Really Telling You

High abandonment isn’t just a tech problem. It’s a borrower confidence problem.

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When drop-off rates spike, it often means:

• Your digital tools don’t align with borrower expectations
• You’re not communicating clearly or frequently enough
• Your internal workflows are causing delays that affect the front-end experience

It also means your staff may be wasting time manually following up on applications that never go anywhere, which is a poor use of time and also a drain on team morale.

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Even more critically, it signals a missed opportunity to convert a motivated, qualified borrower into a long-term member.

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The borrower made the effort to begin the application process. They willingly started, but somewhere along the line, the process said, “It’s not worth continuing.” 

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How Coviance Improves Application Retention

Application drop-off is one of the biggest challenges in home equity lending, and where Coviance makes an immediate impact. But reducing abandonment is only the start. 

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With Fast Track and the Borrower Engage App, Coviance reimagines the entire borrower journey, guiding members seamlessly from application to close:

• Frictionless Digital Applications: The Coviance Online Application is an intuitive, mobile-friendly application tailored to home equity borrowers. No bloated forms. No unnecessary complexity. Just a clean, fast entry point that aligns with how today’s borrowers apply. The more intuitive the application, the fewer chances for friction — and the higher the completion rate.
• Offers Presented at Submission: The Coviance Online Application presents borrowers with real-time loan offers. Upon acceptance, initial disclosures are automatically sent, kickstarting the lending process and giving your team immediate momentum.
• Borrower Collaboration: Our Borrower Collaboration Portal is designed to reduce confusion, increase confidence, and create a sense of control. Self-service tools include a secure place to upload documents, track progress, and receive updates. That means fewer phone calls, fewer “just checking in” emails, and a much smoother path to completion.
• Automated Workflows and Task Routing: Once a borrower accepts an offer, the behind-the-scenes Coviance magic kicks in. Our Collateral Decision Engine routes each file through the fastest, most compliant path—eliminating manual steps and accelerating your time to close.

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Case Study: Champions First Credit Union

Champions First Credit Union serving the North Florida market is a $500M institution that, historically, was not a major mortgage or HELOC player. But as the credit union grew, Vice President of Lending Grant Abbott recognized a serious disconnect: fintechs were closing loans in weeks, while Champions’ own HELOC process often dragged on for nearly a month—frustrating both members and staff.

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Training new staff only made the inefficiencies more visible. The HELOC process was so complex that few employees even wanted to touch it, creating bottlenecks, exit ramps for borrowers, and delays at every stage.

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By implementing Coviance, Champions First CU streamlined the entire experience for both borrowers and employees. Abbot shares:

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“What we see now in the current process by using the Coviance Online Application is we don’t ever talk to the borrower until we already have the application in hand. We generally already have valuation run and we are talking specifics, we’re talking approvals, we’re talking answers. We’re not having to go through all these hypotheticals. We get an application, we’re engaged with them, and we can give an answer and keep them in the process.”

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What You Can Do Next

If your team is seeing high drop-off, or if you’re not sure because you don’t have visibility into the funnel,  it’s time for a borrower experience checkup.

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Ask yourself:

• Are we unintentionally asking too much of the borrower?
• Are we communicating at the right cadence and clarity?
• Are our internal workflows optimized to support a fast, transparent experience?

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And most importantly: are we giving borrowers a reason to stay engaged, or a reason to drop off?

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Coviance can help you answer those questions and fix what’s not working. With purpose-built home equity tools, you can turn drop-off into pull-through. Ready to get started? Request a Home Equity Health Check to see how your credit union’s home equity program stacks up against industry benchmarks and learn how you can work smarter, not harder.