Buyers report ongoing difficulties throughout the loan process
In a new report titled “High demand, higher hurdles in the mortgage market” issued by finicitya Mastercard company, 89% of respondents found applying for a loan to be more or as stressful as the experience of buying a home.
the report examines the issues consumers face during the mortgage process and how digital solutions can streamline the process.
For the study, Finicity surveyed 1,075 consumers, focusing on the current mortgage landscape and the consumer experience of homebuyers or those who have refinanced since April 2020.
“Buying a home should be exciting, not frustrating. And, the loan process can be a seamless end to the home buying or refinancing experience,” said Andy Sheehan, Chairman and COO of Finicity, a Mastercard company. “In this digital age, heaps of paperwork and lengthy processes should be a thing of the past. Many lenders today offer a partial digital loan process, but that doesn’t mean the customer experience is always better. Friction in the process may still exist.
Key findings from the Finicity study include:
- 89% of respondents think the experience of applying for a loan was more stressful or just as stressful as the experience of buying a home.
- 72% of respondents were surprised or very surprised at the volume of paper-based processes that still take place at many mortgage stages.
- 64% said they were frustrated with their initial loan application process, which led to reluctance to refinance.
And as more and more processes become automated through advances in technology and artificial intelligence (AI), respondents expressed their views on the role technology plays in the mortgage process.
“Lenders will need to continue to refine the digital mortgage process and improve functionality to ensure an intuitive and efficient customer experience,” Sheehan said. “Open banking data provides digital verification of assets, income, and employment that can increase satisfaction, reduce short-term risk and costs, and increase long-term customer loyalty.”
Commenting on the digital side of the mortgage process, the survey revealed:
- Only 12% of respondents indicated that they were not comfortable entrusting their personal financial data to a lender.
- Borrowers who used digital verifications were half as likely to say the loan process was the most stressful part of the home buying experience.
- More than half (54%) of respondents said it took between 30 and 60 days to get from application to the closing table, with 16% saying the process took more than 60 days.
“The most frustrating part of the loan application process for the majority of respondents relates to the recurring inefficiencies associated with providing physical copies of financial documents,” the report said. “This frustration is not surprising considering that digital natives make up the largest percentage of survey respondents, with 84% being between the ages of 18 and 44.”
Click here to read Finicity’s “High Demand, Higher Barriers in the Mortgage Market” report.