The gradual shift to digital mortgages
In Fannie Mae’s latest Perspectives blog, “The Pandemic’s Impact on Mortgage Digitization and Homebuyer Satisfaction,” authors Tim McCallum and Jenney Shen, both vice presidents of Single-Family Customer Management Solutions, examined buyer satisfaction at buy a home digitally in the time of the pandemic.
The study was part of Fannie Mae’s First Quarter 2021 National Housing Survey, where homebuyers who purchased a home in 2020 with mortgage origination dates between May 1, 2020 and December 1, 2020 have were asked about their mortgage experience during the pandemic.
Overall, consumers were satisfied with their digital mortgage experience, with first-time homebuyers being more willing to allow electronic access to their records, compared to repeat buyers (41% vs. 33%, respectively). Among those who used digital channels, a majority of recent borrowers (57%) said the pandemic had no impact on their decision to use digital channels, but a reasonable proportion (38%) said that the pandemic had some influence on their decision to use digital channels.
“As millennials start buying more homes, they may be more willing to allow lenders to access their records electronically, as many young consumers have grown up allowing digital apps and online businesses to access their financial information, ”the blog’s authors said.
However, with homebuyers doing a transaction the size of a home, homebuyers always wanted the ability to speak in person with a representative throughout the mortgage process.
“Our hypothesis was that performing mortgage tasks exclusively online would become more prevalent during the pandemic period,” said McCallum and Shen. “However, while there was a small but significant increase in the number of consumers using online-only channels from the previous year (12% vs. 7%, respectively), more recent homebuyers wanted always have the option of speaking to a representative throughout the mortgage process. . Since a mortgage is often a consumer’s biggest expense, and tends to be more complicated than other purchases, it makes sense that people are unwilling to forgo discussions and in-person advice on such a large, complex and infrequent operation. purchase.”
A closer look at race and income levels found that high-income, Asian and black respondents showed a greater preference for completing mortgage tasks online, while low-income and Hispanic consumers were drawn to performing tasks with a representative in person or over the phone. These results demonstrate that there is no single best approach to guide consumers through the mortgage process, and businesses and lenders should be sensitive to the diverse needs of individuals and groups.
In a survey of various mortgage lending institutions, respondents were more satisfied with traditional banks (90%) and credit unions (93%) than with mortgage banks (85%). In addition, when segmented by size, small and medium-sized lenders have significantly more “very satisfied” consumers than large lenders.
“In conclusion, consumer satisfaction with the mortgage experience has remained high during the pandemic, but the change in consumers using online processes has not been as large as expected,” said McCallum and Shen. . “The digital switch-over continues to be a gradual process, with some segments presenting different online / in-person service needs. Since buying a home is a rare and complicated expense, switching to online-only channels seems like a flawed solution for many borrowers who have questions and want to make the right choices.
Click here for the blog Fannie Mae Perspectives: The Impact of the Pandemic on the Digitization of Mortgages and Homebuyer Satisfaction.