Fannie Mae’s National Housing Survey revealed that more than one-third of homebuyers last year said they did not shop around before choosing their mortgage lender.
“The choice to not compare quotes among different lenders appears to be explained in part by the influence of non-financial priorities,” said Doug Duncan, Fannie’s Mae's SVP and Chief Economist. “Real estate agents and family and friends were listed among the most influential sources of advice regarding lender selection; however, our data do not reveal whether that advice includes encouragement to seek multiple quotes.”
Duncan said shopping for mortgages through different lenders can be complicated and time consuming, as evaluating the “price” of a mortgage involves several components—including fees, rates, and points.
He added while the rise of online shopping can be convenient, a homebuyers information must go through a lender to get a full quote.
According to his commentary, Duncan said recent homebuyers who received only one quote reported doing so because they were comfortable with the lender, and there was less concern with competitive terms when selecting a lender.
“We see very little variation in comparison shopping by source of information (e.g., online resources).” Duncan said. “However, homebuyers who did get multiple quotes were more likely than others to say that online resources were an influential source of advice for them.”
Homebuyers who received just one quote still report some level of regret in their decision.
“By not shopping around to give themselves leverage when negotiating their mortgage, some homebuyers are leaving money on the table. Competition only works if consumers assess their options,” Duncan said.
Fannie Mae’s latest National Housing Survey found that many overestimated the qualifications and what it takes to own a home.
“Despite increased exposure to credit scores and online resources, consumer understanding about what it takes to qualify for a mortgage has not improved since our original study in 2015, potentially discouraging willing and qualified Americans from taking steps toward homeownership,” the GSE’s report, authored by Mark Palim and Sarah Shadad of Economic and Strategic Research, stated.