Ease and convenience matter as much as cost to some people shopping for mortgages in the wake of the foreclosure crisis.
About a third of consumers are willing to pay more for a mortgage that comes with superior customer service and less stress, according to a recent survey of 618 people conducted by the Carlisle & Gallagher Consulting Group, which focuses on the financial services industry.
In a detailed report released in February, the firm presented the findings as instructive for big banks that want to win more mortgage business in a market increasingly crowded with independent lenders and community banks. “It’s incumbent upon banks to get to know their customers again and understand what’s driving their decisions,” said Doug Hautop, Carlisle’s lending practice leader.
The survey group was weighted toward the higher end of the income scale — almost half of those interviewed earn more than $100,000 a year. Slightly more than half had either bought or refinanced a home since 2010.
Asked to name the most important factor in the mortgage-selection process, more than 80 percent of the respondents cited cost, a response “that goes without being said,” Mr. Hautop said, given that “folks always want the lowest price.”
Still, a certain “high-touch” segment expressed a willingness to pay more for a less stressful application process. In particular, the 18-to-35 age group seemed most inclined to pay more for convenience and direct access. “That millennial age segment values more the technology investments, the ability to have real-time access,” Mr. Hautop said.
After cost, consumers cited trust in the financial institution and customer service as major factors, signaling a general frustration with the mortgage process and, the study noted, big banks in particular.
Topping respondents’ list of pet peeves (after high cost) was slow execution, followed by difficult communication, and an inability to track the status of an application. And chief among their expectations was having direct access to a mortgage representative — 70 percent of respondents want it. Asked if they would be satisfied with an online chat, most said no.
“Because the experience has been where there’s a lot of repetition in documents being submitted, and a long cycle, people would rather have one rep so they only have to explain things once,” Mr. Hautop said.
One in three respondents would consider taking their business to Walmart if the discount retailer offered mortgages. While the question was hypothetical, the response indicates the power of trust in brand, Mr. Hautop said.
A separate survey last November by Fannie Mae also reflected consumer sensitivity to trust. Seventy percent of the 1,000 homeowners and renters polled cited the reputation of the lending institution as a major influence on their choice of lender. Cost competitiveness actually scored lower, at 62 percent.
Michael L. Moskowitz, the founder and president of Equity Now, a direct mortgage lender based in Manhattan, said the Carlisle survey’s findings confirmed what “we knew instinctively.” Cost advantage is key, but it doesn’t matter if the company doesn’t have a reputation for treating customers well, especially when it comes to speed of closing, he said.
The study showed that big banks are sitting on considerable unrealized potential among customers: 70 percent of respondents would prefer to have a mortgage with their primary bank. Only 40 percent do.
Banks therefore “have a leg up in the process,” said Matt Hackett, Equity Now’s underwriting manager. “They basically just need to meet expectations.”
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