On average, home buyers considered approximately two banks or lenders when applying for a mortgage. The majority of those (47%) obtained a mortgage at a bank where they did not have an existing account. Only 34% of home buyers obtained a mortgage at their primary bank.
There’s room for improvement in the home financing industry, at least according to the inaugural Mortgage Service Index, a survey conducted by TD Bank.
Only 58% of those surveyed felt that their lender helped them to understand the mortgage process, just 59% felt that they were kept informed throughout the process, only 61% felt that the lender showed adequate responsiveness, and 62% felt that their lender was accessible during the process.
“The TD Bank Mortgage Service Index provides a detailed look into customer issues, concerns and pain points,” explains Michael Copley, EVP/Retail Lending at TD Bank.
Of those who affirmed they had a very positive home buying experience, approximately three quarters rated their lender as “excellent” or “very good” in responsiveness (74%), accessibility (76%), and honesty and transparency (76%), showing that these factors contribute highly to a buyer’s perception of the overall home purchasing process.
Lenders who are accessible and responsive to home buyer needs, and up-front during the process can improve borrowers’ overall experience. Additional factors that rated high by those who had an “excellent” or “very good” experience were lenders who:
- instilled confidence throughout the process (73%)
- helped buyers understand the process (73%)
- kept buyer informed during process (73%)
- explained the mortgage and available options (72%)
“Of those who cited having a good lending experience, 69% applied for their mortgage in person.”
— TD Bank Mortgage Service Index
An equal number of those home borrowers (43%) obtained their information on the lending process from their bank as much as they did from their realtor, highlighting the importance of realtors to financial marketers in the lending cycle.
The lending process has a huge impact on how people perceive their overall home buying experience. 80% of those who had a positive home buying experience felt that they had an “excellent” or “very good” experience obtaining a mortgage, while just 39% of those with a poor home buying experience felt the same.
82% of those surveyed feel that right now is a “very good” or “good” time to purchase a home, with 90% expecting the housing market to “stay the same” or “improve” over the next six months.
Buyers Under Stress
Survey results also indicate that although buyers rated the overall home buying process as excellent or very good, most buyers still experience raised stress levels. One quarter (24%) of those surveyed found buying a home to be “extremely” or “very stressful” and 45% found it to be “somewhat stressful.”
Approximately two thirds (65%) of those surveyed applied for their mortgage in person, while 35% applied online or over the phone, indicating that many home buyers continue to seek in-person discussion and council with lenders.
Of those who cited having a good lending experience, 69% applied for their mortgage in person, while among those who cited a poor lending experience 47% applied in person, thus supporting the positive impact of face-to-face interaction with lenders.
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Lending Experiences Positive Overall
Nearly two-thirds (64%) of those surveyed found their most recent home buying experience to be “excellent” or “very good,” with 67% also reporting a positive mortgage-approval process.
Slightly more than half of those surveyed said they had “excellent/very good” experiences during the following: finding a good Realtor (55%), home appraisal/inspection process (55%), finding the right lender (53%) and the length of the entire home buying process (53%).
Additionally, 66% of survey responders described their experience with their bank or lender to be “excellent” or “very good,” and among those who had a good home buying experience overall, 83% cite having a very good lender experience, illustrating how critical banks and lenders are to customer attitudes towards creating a positive home buying experience.
About the Survey
The Mortgage Service Index was designed to identify best practices and trouble areas in home financing and can act as a service indicator for lending institutions.
The index, which was generated through a national survey of more than 1,500 consumers who purchased homes within the last 10 years, was conducted to gain insight into consumers’ home buying experiences, with specific emphasis on the home financing process.
The study was conducted among a nationally representative group of consumers from March 6-11, 2013. The sample size of 1,519 has a margin of error of +/- 2.5%. The survey was hosted by global research company Angus Reid Public Opinion.