Mortgage Lending Shifts to Digital Channels

Satisfaction among mortgage customers has improved overall this year as lenders have shifted their focus to developing functional digital channels and improving operational efficiency.

The J.D. Power 2015 U.S. Primary Mortgage Origination Satisfaction Study released Monday determined mortgage customer satisfaction from 4,666 respondents based on application/approval process; interaction; loan closing; loan offerings; onboarding; and problem resolution.

The survey showed that overall customer satisfaction with mortgage origination averages 793 on a 1,000-point scale in 2015, up seven points from 2014.

JD Power credits much of the increase to a 22 point jump in the application and approval process factor, which was  influenced by improved perceptions of the speed of the loan process.

Satisfaction is typically higher when loans close earlier than promised (866), compared to when loans close as expected (821), and when it takes longer than expected (658), the results showed.

Quicken Loans came in first place with the best primary mortgage origination satisfaction for a sixth consecutive year, with a score of 850, up 15 points from 2014, the results found. Fifth Third Mortgage ranks second with a score of 812, followed by Bank of America and BB&T in a tie at 811 each.

In addition, consumers appeared to have been more satisfied using digital channels rather than other methods.

The survey showed that customers were more content completing an application (799), submitting documents (804), and receiving status updates (811) through digital channels, compared to communicating via mail or fax (753, 766, and 770, respectively).

 

"While a lot of effort has been placed on ensuring compliance with new regulations, it is imperative that lenders improve their education and communication about the impact of these changes or risk losing customers," said Craig Martin, Director of the Mortgage Practice at J.D. Power.

He continued, "Effective communication remains one of the most important aspects of a satisfying mortgage experience, especially if the process is taking longer than it has historically. As the number of Millennial home buyers continues to rise, lenders must be ready to meet their expectations. This generation is highly digitally connected, so ongoing communication and transparency via the channels they prefer, particularly mobile, are vital."

However, JD Power says that despite the rise in mortgage customer satisfaction, lenders feeling more pressure from TILA-RESPA Integrated Disclosure (TRID) rules, which could increase the time it takes to get a home loan while also facing increased competition from non-traditional lenders.

"This law has the potential to increase the mortgage timeline which poses a significant challenge for lenders when serving home buyers across all generations, but could be particularly challenging when dealing with Millennials (ages 18-34) who are technically savvy, always connected to the Internet and noted as being capricious consumers," the survey explained.

Click here to view the complete survey.