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National Housing Survey/Home Purchase Sentiment Index (HPSI)

January 2nd 2014 Topic Analysis

January 2, 2014
Technology Use in Mortgage Shopping: Practices and Opportunities

Consumer Research & Analysis

This study was highlighted in a feature article by Steve Deggendorf in the March 2014 issue of the MBA's Mortgage Banking Magazine

In a recent study from Fannie Mae’s Economic & Strategic Research Group, data from our National Housing Survey demonstrate that consumers who don't leverage technology when shopping for mortgage rates or when looking for a lender or real estate agent may be selling themselves short. There is a particular gap among lower vs. higher income consumers.

The findings suggest that using online tools could help mortgage borrowers obtain better outcomes -- including lower costs, fewer surprises at the loan closing table, and higher long-term satisfaction with their choices -- by improving their understanding of mortgage terms and costs and enhancing their ability to make simultaneous comparisons of loan terms from multiple lenders.

The data show that higher income borrowers are more likely than lower income borrowers to rely on their own calculations while mortgage shopping. Conversely, lower income borrowers say they are more likely than higher income borrowers to rely on real estate agents, mortgage lenders, family, and friends for advice and recommendations in the mortgage shopping process.

  • Among those surveyed, 12 percent of higher income borrowers said they have used online tools or applications to calculate how much to borrow through their mortgage loan, compared to 5 percent of lower income borrowers.
  • Twenty-three percent of lower income borrowers said advice from their lender or real estate agent had the most influence on the amount of money they borrowed, compared to 15 percent of higher income borrowers.

We also found that higher income borrowers are using online shopping approaches about twice as frequently as lower income borrowers, which aligns with a stronger focus on doing their own calculations as noted above. However, all income groups aspire to use the Internet even more than they currently do, indicating that online technology will likely play an increasingly larger role for all borrowers in the mortgage shopping process and presents opportunities for shopping enhancements.

  • Forty-eight percent of higher income borrowers said they have obtained a mortgage quote online, compared to 20 percent of lower income borrowers.
  • Higher income mortgage borrowers more often say that an improved ability to compare multiple loan offers would make the mortgage shopping process easier, while lower income consumers more often say they would like to have easier ways to understand loan terms and costs.

Possibly contrary to the sharp growth in the general use of mobile technology, borrowers also told us they will use personal computer technology significantly more so in the future than mobile technology to shop for their mortgage and manage their personal finances. In addition, consumers say that social media plays a small role in mortgage shopping now and is likely to play a small role in the future.

On this webpage you will find a link to an FM Commentary from Steve Deggendorf, Director of Economic & Strategic Research, that provides additional key insights from the study results, as well as a survey results deck, a data summary of responses to questions asked, technical notes providing in-depth information about the survey methodology, the questionnaire used for the survey, and a comparative assessment of the Fannie Mae National Housing Survey and other consumer surveys. 

Fannie Mae's Topic Analysis Reports provide deeper insights into one or more housing issues based on the compilation of three monthly National Housing Survey samples. The National Housing Survey polls more than 1,000 homeowners and renters each month to assess their attitudes toward owning and renting a home, the current state of their household finances, views on the U.S. housing finance system, and overall confidence in the economy. The three monthly survey studies that make up any given Topic Analysis Report are identical in wording and placement of questions. 

Downloads and Related Links
FM Commentary
Presentation About National Housing Survey Topic Analysis Focus (PDF)