Online Mortgage Interest | CFPB/FHFA Originations Survey

The latest, highly-anticipated quarterly joint survey conducted by the CFPB and FHFA was recently published on July 30 and the results reflect growing consumer confidence in the mortgage industry, along with the continued popularity of online banking options in the contemporary financial market. The data, collected from the National Survey of Mortgage Originations, was gathered by asking new borrowers who obtained residential mortgages questions about their experiences with the loan process, their personal opinions of the mortgage industry, and their expectations regarding the life of their loan.

The survey, mandated by the Housing and Economic Recovery Act (HERA) and the Dodd-Frank Act, covers the period of 2017 to 2019 and demonstrates increasing positive impressions of the industry among consumers, along with a gradually shifting marketplace. The percentage of respondents who reported not being concerned about qualifying for a mortgage increased from 48% to 51% for purchases and sharply rose from 57% to 66% for refinances. Borrowers who cited the importance of online banking options held steady at 40% for purchases and 44% for refinances. Perhaps most tellingly statistics, broker usage rose from 42% to 46% on purchases and 30% to 38% on refinances, while the number of respondents who applied directly through a bank or credit union dropped from 54% to 49% on purchases and 67% to 61% on refis.

At least a couple of clear trends can be extrapolated from the above data. First, large swaths of the mortgage industry’s customer base appear to be pivoting away from brick-and-mortar neighborhood banks and towards local brokers who are able to offer more flexibility and more options for consumers. Also, online banking is clearly no passing fad, as nearly half of respondents cited online application options as a very important aspect of a positive banking experience.

These statistics, however, come with an unavoidably large caveat: the responses were tabulated and collected just prior to the worldwide COVID-19 pandemic. Social distancing and widespread bank/office closures would lead one to believe that the next CFPB/FHFA survey will almost certainly demonstrate a massive increase in customer interest in online options, influenced in part by a surge in social media awareness and use among servicers to better attract customers trying to do business while quarantining at home. The ability of loan providers to reach and interest customers who are unable to visit their physical locations has become a crucial component of success since early 2020 and the above data shows that the seeds of this trend were already planted before the coronavirus became a household name. The message is clear: customers crave choice, flexibility, and the capacity to browse servicer options and manage their loan from the comfort of their home. And lenders slow to respond to these trends may find themselves obsolete much sooner than they ever imagined.