Agents, warn your clients: The mortgage process is slowing down, not speeding up.
Despite greater use of technology, more and more borrowers applying online and fewer loans to go around, borrower satisfaction — as rated in the latest survey from market research company J.D. Power — declined this year, while the amount of time it takes to get a loan increased.
Says Craig Martin, director of the consumer insights and analytics firm’s mortgage practice:
“A critical element of satisfaction is setting expectations, and this tends to be a weakness of technology, which is demonstrated by substantially lower satisfaction among customers who do not work with a human to complete their application.”
Martin says the home lending field is “at a critical inflection point” where technology and the growing use digital applications has made it possible for mortgage originations to move more quickly. But, he adds, “the customer is still the final judge of speed and quality.”
And according to the survey, overall satisfaction declines as purchase process slows.
The study found that overall satisfaction with lenders is down 8 points (on a 1,000-point scale) from 2016, driven, in part, by reports of longer times from initial application to closing.
On average, the lending process took 36 days from initial application to close this year, an increase of a week from 2016, the study found. “Digital maybe a little easier, but in terms of the 10 or 15-day close, for the most part, it’s not out there,” Martin told Inman News.
Another major finding of the latest annual study: Digital use surges but not digital satisfaction.
For the first time in the study’s history, both refinance and purchase customers cite online or a website as the most frequent method of submitting a mortgage application. A total of 43 percent of mortgage customers indicate applying digitally in 2017, up from just 28 percent in 2016.
On the other hand, satisfaction among customers applying either online or via website has declined by 18 points year-over-year. Worse, the satisfaction rate among digital borrowers trails that among people who apply in person, the old fashioned way, by 10 points.
Martin says digital applicants expect the process to move along boom, boom, boom, but it doesn’t. “There may be an increase in expediency, but how much time does it really shave off?” he wonders.
The J.D. Power executive uses how people now track package deliveries as an analogy to the mortgage process. When tracking a package, he says, the process is completely transparent and people are informed every step of the way. But with digital mortgage applications, “people have to learn to deal with a different level of expectations.”
As other surveys have shown, those who actually interact with would-be buyers play a key role in building customer trust, according to the Power study.
Overall satisfaction among mortgage customers with high levels of trust in their loan representatives is 358 points higher than among those with low levels of trust, the analytics firm found. The top three elements driving that perception of trust are: Calling back when promised; pro-actively providing status updates; and continuity in working with a single lender rep throughout the process.
The study also rated various lenders on their ability to satisfy their clients. As in previous survey’s, Quicken Loans scored the highest, with an 878 rating.
But this year, Quicken was matched by the Guild Mortgage Co., a national lender based in San Diego. Prime Lending of Dallas, which has 1,500 loan officers located throughout the United States, placed third with a score of 859.
The 2017 U.S. Primary Mortgage Origination Satisfaction Study measures customer satisfaction with the mortgage origination experience in six factors.
Listed alphabetically, they are: application/approval process; interaction; loan closing; loan offerings; onboarding; and problem resolution.
The study is based on responses from 5,893 customers who originated a new mortgage or refinanced within the past 12 months, and was fielded in July and August.
Lew Sichelman’s weekly column, “The Housing Scene,” is syndicated to newspapers throughout the country.