A year ago, after studying a consumer’s ability to shop for a mortgage online, Fannie Mae researcher Steve Deggendorf concluded that what the market needed was an easy-to-use comparison shopping site for home loans.
Deggendorf, the agency’s director of economic and strategic research, is still waiting for some tech-savvy entrepreneur, particularly one without a vested interest in the results, to develop that online mortgage tool.
The agency’s latest research shows that technology is playing an increased role in a consumer’s search for a home loan, and they would like to employ it even more. However, lower-income borrowers in particular continue to rely more on advice from real estate agents and mortgage brokers than they do on their own calculations, online financial tools or the advice of family members, friends and co-workers.
It is not for a lack of online and mobile options. Go to the website of most lenders or the application stores for smartphones, and there’s an abundance of easy-to-use calculators that let users get a sense of their monthly mortgage payments under different financial scenarios. Deggendorf said he believes that’s not enough, particularly given the research’s survey results.
Regardless of their income level, consumers surveyed by Fannie Mae said they would like to do more activities online related to their mortgages than they are now.
For instance, 25 percent of borrowers with annual incomes of less than $50,000 have looked for a mortgage lender online, but 43 percent would like to do so. Among borrowers with incomes of $50,000 to $100,000, 38 percent have obtained a mortgage quote online, but 52 percent aspire to do that. About 63 percent of higher-income borrowers said they would like to be able to go online to calculate how much they should spend on rent or a mortgage payment, but only 56 percent have already done so.
What’s behind the disconnect?
Various apps “help in certain ways, but they don’t get through the details that help someone do the comparisons to say, ‘What is the right offer for me?’ ” Deggendorf said.
“There’s no killer app, no perfect site,” he added. “What’s striking to me is that (there) are still major issues waiting for a solution. It’s still hard to say, ‘Is the deal with 4 1/2 percent with these fees and these points better than 4 1/4 percent with these fees and these points?’ ”
The survey of 3,010 consumers also found that borrowers who bought a home or refinanced an existing mortgage within the past three years were younger, more educated (almost half had college degrees) and were employed full time. Also, 74 percent of borrowers made at least $50,000 annually (compared with 60 percent of previous borrowers who made that sum), the survey found.
Deggendorf also is waiting for developers to see the potential of making easy-to-use tools for tablets and particularly, cellphones, since many lower-income people use their smartphones as they would a computer. A study last year by the Pew Research Center found that 43 percent of households with income of less than $30,000 own a smartphone.
Currently though, most consumers are interested in accessing financial tools through a traditional personal computer rather than a tablet or smartphone.
One technology that consumers aren’t expressing much interest in is using social media in their mortgage search, even though a Pew survey found that 73 percent of adults online use social networking sites. Consumers are most interested in using social media to help them find a home to rent or buy, but there is less interest in using some of those channels to select a mortgage lender.
Source: MCT Information Services