In Fannie Mae’s latest Perspectives Blog, “The Pandemic's Impact on Mortgage Digitization and Homebuyer Satisfaction,” authors Tim McCallum and Jenney Shen, both VPs of Single-Family Customer Management Solutions, examined homebuyers’ satisfaction with buying a home digitally in the time of the pandemic.
The study was part of Fannie Mae’s Q1 2021 National Housing Survey, where homebuyers who purchased a home in 2020 with mortgage origination dates between May 1, 2020 and December 1, 2020 were polled about their mortgage experience during the pandemic.
Overall, consumers were satisfied with their digital mortgage experience, with first-time homebuyers more willing to authorize electronic access to their records, compared to repeat homebuyers (41% vs. 33%, respectively). Of those who used digital channels, a majority of recent borrowers (57%) said the pandemic had no impact on their decision to use digital channels, but a reasonable proportion (38%) did indicate that the pandemic had some influence on their decision to use digital channels.
“As millennials start to buy more homes, they may be more willing to allow lenders to access their records electronically, since many younger consumers grew up allowing digital apps and online companies access to their financial information,” said the authors of the blog.
However, with homebuyers making a transaction with the magnitude of a home, homebuyers still wanted the ability to speak in-person with a representative throughout the mortgage process.
“Our hypothesis was that conducting mortgage tasks exclusively online would become more prevalent during the pandemic period,” said McCallum and Shen. “However, while there was a small but significant increase in consumers using online-only channels compared to the previous year (12% vs. 7%, respectively), most recent homebuyers still wanted the ability to speak with a representative throughout the mortgage process. Considering that a mortgage is often a consumer’s largest expense–and that it tends to be more complicated than other purchases–it makes sense that people may not be willing to give up in-person discussions and advice regarding such a large, complex, and infrequent purchase.”
A closer examination of race and income levels found that higher-income, Asian, and Black respondents showed a stronger preference for conducting mortgage tasks online, while lower-income and Hispanic consumers gravitated toward conducting tasks with an in-person representative or by phone. These findings demonstrate that there is no single, best approach to guiding consumers through the mortgage process, and businesses and lenders should be sensitive to the diverse needs of individuals and groups.
When polling various mortgage lending institutions, respondents were more satisfied with traditional banks (90%) and credit unions (93%), compared to mortgage banks (85%). Additionally, when segmented by size, small and mid-sized lenders had significantly more “very satisfied” consumers compared to larger lending institutions.
“In conclusion, consumer satisfaction in the mortgage experience remained high during the pandemic, but the change in consumers using online processes was not as large as we expected,” said McCallum and Shen. “The shift to digital continues to be a gradual process, with certain segments showing different online servicing/in-person needs. Since buying a home is an infrequent and complicated expense, shifting to online-only channels appears to be an imperfect solution for many borrowers who have questions and want to make the right choices.
Click here to view Fannie Mae's Perspectives Blog: The Pandemic's Impact on Mortgage Digitization and Homebuyer Satisfaction.