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Study: 80% of Consumers Would Consider a Mortgage from a Non-Bank

A ""recently released study"":http://www.cgcginc.com/sites/default/files/pdf/CEB%20Carlisle.pdf from ""Carlisle & Gallagher Consulting Group"":http://www.cgcginc.com/ (CG) finds that a vast majority of consumers would consider looking to non-banks for their next mortgage.


The group conducted a survey in September of 618 consumers in the United States. According to the findings, 80 percent of respondents would consider purchasing a mortgage from a non-bank institution. One-third of consumers said they would consider a mortgage from retail giant Wal-Mart, while 48 percent would consider a mortgage from online payment website PayPal.

Neither Wal-Mart nor PayPal offers mortgage products, but there are some big players breaking into the home lending space. ""According to a report"":http://www.nytimes.com/2012/11/14/business/major-retailers-start-selling-financial-products-challenging-banks.html?_r=0 from the _New York Times_, Costco has expanded its offerings into mortgage services.

While banks may not feel pressure at the moment from those particular companies, they have no doubt noticed the rise of non-banking entities in the mortgage industry. ""According to data"":https://themreport.com/articles/report-originations-up-in-q3-market-share-opens-among-top-lenders-2012-11-12 from _Mortgage Daily_, ""Quicken Loans"":http://www.quickenloans.com/ was the fifth-most active originator in this year's third quarter and was one of a handful of banks whose market share actually expanded.

The interest in non-banks is somewhat surprising, given that 81 percent of consumers said they would rank their level of satisfaction with their bank at ""high."" However, there are a few major issues that could drive away market share: High interest rates, high payments, and taxes and escrow were cited as the most frustrating issues regarding consumers' current mortgages.

Meanwhile, many respondents expressed aggravation with the application process. Fifty-six percent of consumers say slow execution is one of the most painful aspects of the mortgage process.

Communication is also a big problem. Thirty-two percent of respondents say their lender is difficult to communicate with, while 31 percent say they have been unable to track the status of their mortgage application. Perhaps most disturbing is the lack of trust consumers have for their lenders--26 percent said their lender offers ""untrustworthy advice.""

""Consumer attitude is driven by three things, price, service and trust,"" said Doug Hautop, senior manager and lending practice lead for CG. ""Institutions looking to gain market share must target customer values instead of traditional asset segmentation.""