Borrowers who applied online for home loans were more likely to have used search and product select tools than those who didn’t apply, a June 7 study suggests — and very few online mortgage sites are successful at getting visitors to apply online.

Nearly one in five online mortgage applicants used search, compared with only 7 percent of those who visited online mortgage-related sites but did not apply, according to “Online Mortgage Shoppers’ Paths To Purchase: Navigational And Survey Data Uncovers How Prospects Use Sites,” a study by Compete and Forrester Research.

The study observed navigational behavior from Compete’s panel of more than 2 million consumers between June and November 2005 and studying consumer activities at 12 of the largest firms, including traditional firms like Bank of America, direct lenders like ditech.com, and loan aggregators like LendingTree.

The study concluded that online mortgage shoppers don’t complete many applications. Of the three most successful sites at converting prospects to applicants, LendingTree, Quicken Loans and Countrywide, only 10 percent of visitors to LendingTree filled out applications online — and LendingTree was the most successful.

This is because most prospects prefer to apply offline, the study said, consistent with other studies by Forrester.

Consumers use Web sites to educate themselves on the process, but the majority want human assistance to complete the decision, according to Forrester. Also, online fulfillment processes are “substandard,” with discontented consumers mentioning problems like having difficulty getting questions answered and confusion on how far along they were in the process.

Aggregators like LendingTree receive 72 percent of all prospect visits, with at least 6 million monthly visitors. In contrast, traditional lenders receive 19 percent of visits, and online lenders account for the remaining 9 percent of prospects.

So-called Gen Xers, often defined as those born in the 1960s to the early 1980s, and Baby Boomers, who are sometimes defined as born between 1946 and 1964, are most likely to research and apply for mortgages online, the study concluded. Baby Boomers are than 41 percent of prospects and applicants, while Gen Xers comprise 26 percent of prospects and 31 percent of applicants.

For traditional lenders such as Wells Fargo and Bank of America, a huge number of online prospects are existing customers – 75 percent for Wells Fargo and 65 percent for Bank of America, the study said.

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