Financial institutions underestimate consumers’ demand for speed in the mortgage process
New research from Finastra shows that while rates remain consumers’ key driver in the mortgage lender selection process, trends relating to COVID-19 have put increased importance on digital experience and time-to-close. The pandemic is having an influence on both of these trends, as consumers demand more robust digital loan processes and surging volumes of mortgage applicants extend time-to-close.
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In a survey of 301 consumers and 34 financial institutions, conducted in July and August 2020, these surveyed groups provided their views on expectations around the mortgage process and insight into how consumers select their lender.
“Our survey results confirm that the pandemic has had an immediate impact on the mortgage industry that will continue to reshape the market for months to come,” said Steve Hoke, General Manager, Mortgage, Origination and Analytics, Finastra. “How financial institutions respond now will determine their competitiveness as consumers adopt a more virtual lending model.”
According to the survey, 73% percent of consumers select their lender based solely on interest rates, but acknowledge that time-to-close is the biggest problem in the lending process. In fact, consumers have quite different expectations on closing timelines from what financial institutions view as realistic. Our survey indicated that the majority of consumers expect to close in 15 to 30 days, with 37% expecting a three to 15-day time to close. And due to historically low rates and increased volumes resulting in part from the pandemic, the average close time is actually getting longer. A bank’s ability to compete with non-traditional lending services on close time could protect and even expand their mortgage business moving forward.
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