Quicken Loans Ranks Highest in Primary Mortgage Origination Satisfaction for Seventh Consecutive Year
COSTA MESA, Calif.: 10 Nov. 2016 — Overall satisfaction scores have increased year over year, but a high percentage of home buyers are remorseful about their mortgage lender selection, according to the J.D. Power 2016 U.S. Primary Mortgage Origination Satisfaction Study,SM released today.
The study shows that 21% of customers purchasing a home express regret over their choice of lender, and 27% of first-time home buyers regret their choice. Among customers who regret their decision, there are two distinct situations.
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The first situation is customers having a poor experience (overall scores below 600 on a 1,000-point scale), which includes an above-average incidence of problems, lack of communication and unmet promises. While this group’s responses aren’t unexpected, they are often vocal about their displeasure, making an average of 9.0 negative comments, compared with the study average of 0.7.
The second situation is more unexpected because satisfaction among these customers is high. This group tends to be very price-focused and frequently obtains multiple quotes. Among customers who regret their lender selection, 72% indicate they were pressured to choose a particular mortgage product. Their final lender choice is often linked to financial reasons, such as getting a lower rate because they have a relationship with the firm (e.g., checking account with direct deposit).
“This ‘happy buyer’s remorse’ is in part due to customers feeling that circumstances out of their control drove them to a particular choice and that options weren’t totally clear,” said Craig Martin, director of the mortgage practice at J.D. Power. “Like a lot of consumers, they are happy with a good deal, but they can feel that they have to jump through hoops to get the deal. In the end, they may not fully understand exactly what they got, and the longer-term risk for lenders is that customers’ perceptions of the deal may change in the future.”
One potential contributing factor to this condition could be TRID (TILA RESPA Integrated Disclosure). Over the past two years, much of lenders’ attention has been focused on complying with and minimizing the negative effects of these new requirements, which became effective in October 2015. Lenders have feared that the new requirements would extend an already lengthy process and negatively affect satisfaction. While various sources have reported increases in the total number of days for the lending process, findings of the 2016 U.S. Primary Mortgage Origination Satisfaction Study show little change in the perceived speed of the process. Improved communication and setting expectations appropriately have helped prevent negative perceptions.
“Whether it is a new regulation, shifting rates or new technology, lenders will continue to face challenges that require them to change,” Martin said. “Regardless of what comes, if lenders focus on the needs of the customer and execute on key best practices they can positively influence perceptions and minimize the negative effects on customers.”
Following are some of the key findings in this year’s study:
- A higher percentage of customers in 2016 indicate their loan representative always called back when promised, compared with last year (85% vs. 81%, respectively), and their loan closed on the desired date (81% vs. 79%).
- Satisfaction is significantly higher among customers buying a home (840) than among those refinancing (821). In the 2014 and 2015 studies, the levels of satisfaction in these groups were nearly identical.
- Technology is becoming increasingly important, with 28% of customers indicating they completed their detailed application online, up from 22% in 2015 and 18% in 2014.
- Quicken Loans ranks highest in primary mortgage origination satisfaction for a seventh consecutive year, with a score of 869. Quicken Loans performs particularly well in the application/approval process; interaction; loan closing; loan offerings; and onboarding factors.
- CitiMortgage moves up three positions from fifth in 2015 to second this year, with a score of 851. Ditech Financial, new to the study in 2016, ranks third with a score of 849.
- Wells Fargo Home Mortgage (+52 points) and Nationstar Mortgage (+50 points) post the most significant year-over-year improvements in overall satisfaction.
Advice to Consumers
- Plan ahead when researching mortgage options. Satisfaction among customers who wait until they find a home to look into mortgage options is 92 points lower than among those who look into mortgage options before their home search.
- Take the time to obtain more than one quote. Among the 32% of customers who received just one quote, overall satisfaction is 19 points lower than those who get multiple quotes. Satisfaction is 38 points lower among first-time buyers only getting one quote vs. those who get multiple quotes.
- Choose a lender based on their merits, not just price or affiliation. Customers who say they chose their lender primarily because of price/rate or based on the recommendation of a realtor/builder are significantly less satisfied than those whose choice is based on other reasons.
About the Study
The 2016 U.S. Primary Mortgage Origination Satisfaction Study measures customer satisfaction with the mortgage origination experience in six factors (listed alphabetically): application/approval process; interaction; loan closing; loan offerings; onboarding; and problem resolution. Satisfaction is calculated on a 1,000-point scale.
The study is based on responses from 5,182 customers who originated a new mortgage or refinanced within the past 12 months, and was fielded in July–August 2016.
For more information about the 2016 U.S. Primary Mortgage Origination Satisfaction Study, visit http://www.jdpower.com/resource/us-primary-mortgage-origination-satisfaction-study.