What do homebuyers think of the mortgage industry?

It’s a popular time for new year resolution, so how about a little self-assessment of the mortgage industry? We have always wondered what homebuyers think of mortgage lending, so we asked 1,019 of them for some feedback in the latest ValueInsured Modern Homebuyer Survey.

Spoiler alert: it’s not unilaterally glowing, but when homebuyers speak up, and when we listen, it could help inform the long-term success of any lender.

Three key themes emerged in our survey results:

  1. First, some homebuyers seem to have trouble finding distinction and differentiation among different mortgage lenders. Slightly over half (53%) of all interested homebuyers say mortgage options from all mortgage brokers and lenders are “virtually the same”, and they cannot tell the difference from one lender to another. This is a challenge not only prevalent among less experienced homebuyers – in fact, more experienced homebuyers who are not buying their first home appear most jaded, among which 65% say all mortgage options and lenders are “virtually the same”. Non-home owning Millennial women who are considering buying their first home appear to be a segment most open to learning more about the differences among different mortgage lenders, with 68% believing they are not all the same.
  2. The second theme that emerged speaks to the perceived lack of innovation in the industry. 54% of all homebuyers believe the mortgage industry lacks innovation, and that mortgage lending is the same today as it was 10 years ago. Among Gen-Xers, some of whom might have actually bought their first home about 10 years ago, nearly 6 in 10 (59%) believe mortgage lending has not changed in a decade. 52% of them went as far as saying mortgage options are the same for them today as what might have been available when their grandparents bought their first home. This is obviously far from the truth in reality, but the perception among some of these homebuyers is concerning. Again, Millennial female first-time homebuyers are most open to learning about new mortgage options available to them today, with 69% believing options have changed over the years.
  3. The third theme that emerged likely stems from the perceived lack of differentiation and innovation in mortgage lending, many homebuyers now see mortgage products as a commodity. 64% of all homebuyers say all mortgage lenders offer the same products, so they only shop for points and rates. We recently learned in a Fannie Mae survey that when it comes to applying for a home mortgage, homebuyers still prefer a human touch over an all digital experience. However, 71% of our surveyed homebuyers say they care less about whether they like a loan officer or mortgage broker, and care more about who could offer them the lowest rates.

It is ironic that while over half of all homebuyers now accuse the industry of having no innovation, over 6 in 10 (63%) also believe they can soon close a mortgage entirely online without any help from a mortgage professional. This speaks perhaps to a dangerous trend of racing to the bottom of offering the lowest points and rates among lenders in order to stay competitive, as we saw recently that profit margins continue to narrow. The latest learning also highlights the eroding loyalty and lender affinity among homebuyers, many of whom seem to believe mortgage application is a process they could manage autonomously without professional consultation.  

As we embrace a new year to drive progress in the mortgage industry, let’s bear in mind that our customers’ perceptions may not always be reality, and it is important that we don’t allow our customers to become disenfranchised. There are plenty of innovations in mortgage lending that we should all be proud of; it may be time we do a better job educating homebuyers of many new and better ways now available to them to buy and refinance a home, so their perceptions could finally catch up with our 2018 realities.