LoanUPDATE takes a byte out of the mortgage process

LoanUPDATE takes a byte out of the mortgage process

January 31, 2005

J.D. Power and Associates reports: Mortgage brokers provide valuable service for home loan customersmortgagepress.com2005 Home Mortgage Study, customer satisfaction, customer service
Although slightly fewer than one-third of mortgage shoppers used
a broker to help them find their current mortgage, those customers
who did tend to be very satisfied with the lending experience,
according to the J.D. Power and Associates 2005 Home Mortgage
Study. Among consumers who responded to the survey, 29 percent
indicate that they contacted a broker to help them find their
current mortgage. Those customers who used a broker tend to be
substantially more satisfied with the broker personnel compared
with those who interfaced directly with the lender's personnel. The
study is based on responses from more than 11,000 home mortgage
"Brokers appear to perform significantly better in meeting
customer expectations," said Jeremy Bowler, director of the finance
and insurance practice at J.D. Power and Associates. "Brokers are
perhaps more dependent on customer referrals than the direct
lenders. As a result, brokers may be more in tune with the cause
and effect of customer satisfaction and advocacy."
However, those customers who contacted a broker while shopping
but then applied directly to an originating lender appear to be the
most satisfied with the mortgage origination experience.
"While this is the case for only five percent of all mortgage
customers, those direct-to-lender customers who comparison shopped
with at least one broker rate both the lender personnel and the
loan application and approval process higher than do customers who
never contacted a broker in their shopping process," Bowler
The study's Customer Satisfaction Index is based on four key
factors of the mortgage lending process. Day-to-day administration
of the account is the most important factor, accounting for 32
percent of overall mortgage service satisfaction. Billing and
payment experiences are nearly as important (30 percent), followed
by the loan origination process (21 percent) and the
customer-initiated contact experience (16 percent).
"With rates on the rise, lenders have seen a decline in
call-center call volumes from shoppers," Bowler said. "However, for
those customers who do contact their lender with a question or
problem, the way the lender handles their needs is critical in
influencing their long-term impressions of the lender and their
likelihood to consider their current service provider the next time
theyre in the market for a home loan."
Timely resolution of a problem has the greatest impact on
customer contact satisfaction. The longer it takes to resolve a
problem, the lower a customer's satisfaction is with their contact
experience. About one-half of all problems are remedied within
three days, but customer satisfaction declines dramatically when a
problem takes more than one week to resolve.
"This can have a profound impact on customer loyalty and
customer recommendations," Bowler said. "The likelihood that a
customer will offer a personal recommendation for their loan
service provider decreases by almost one-half when they are not
completely satisfied with their lender."
Among consumers who rate their lender a nine overall on a
10-point scale, only two in five indicate they will definitely
recommend their lender to others.
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