A new report, High Demand, Higher Hurdles in the Mortgage Market, was released today by Finicity, a Mastercard company. The report reveals key issues consumers face during the mortgage process and how digital solutions are starting to provide relief. The report states that 89% of respondents find the loan application was more stressful or as stressful as the home-buying experience.
Finicity conducted a survey of 1,075 consumers to uncover pain points in the homebuying and mortgage refinancing experience.
“Buying a home should be exciting, not frustrating,” said Andy Sheehan, President and Chief Operating Officer, Finicity. “And, the loan process can be a seamless end to the home buying or refinancing experience. In this digital era, mounds of paperwork and lengthy processes should be a thing of the past. Many lenders do offer a partial digital loan process today, but that doesn’t mean that the customer experience is always better. Friction in the process can still remain.”
“Lenders will need to continue to refine the digital mortgage process and improve functionality to ensure an intuitive and efficient customer experience,” continued Sheehan. “Open banking data provides digital verification of assets, income and employment that can drive satisfaction, reduce risk and costs in the short term, and increase customer loyalty in the long term.”
As demand surges alongside prices, house hunting has become extremely competitive and intense. Finicity’s survey results indicate that the loan experience is just as or more stressful for respondents. The survey found that 89% of respondents believe the loan application experience was more stressful or equally as stressful as the home-buying experience; 72% of respondents were surprised or very surprised at the volume of paper processes that still take place in many stages of the mortgage; and 64% indicated frustration with their initial loan application process leading to hesitation in refinancing.
The mortgage process is still behind in digitization compared to daily tasks and other finance sectors such as payment and banking apps. Moving towards a digital loan process is what consumers expect from lenders nowadays. Only 12% of survey respondents indicated that they were uncomfortable permitting their personal financial data to a lender. Additionally, borrowers who used digital verifications were half as likely to say the loan process was the most stressful part of the home buying experience.
Consumer-permissioned open banking solutions allow for digital verifications throughout the mortgage process, which can shave days off the entire experience. Over half (54%) of total respondents said it took between 30 to 60 days to go from application to close, with 16% indicating more than 60 days.
