With the housing sector officially back on the path to recovery, institutional lenders have implemented new mortgage guidelines. Consumer confidence has allowed popular lenders to stray from the strict underwriting that resulted from the housing sector decline. As a result, customer satisfaction with mortgage origination lenders has reached a seven-year high. In particular, first-time buyers are very satisfied with the service they have received from respective mortgage lenders. According to the J.D. Power 2013 U.S. Primary Mortgage Origination Satisfaction Study, satisfaction is considerably higher than it was this time a year ago.
The study accounts for four key factors associated with the mortgage origination experience: application and approval process, loan representative, closing and contact. According to findings, overall customer satisfaction improved for a third consecutive quarter. On a 1,000-point scale, customers in 2013 averaged a score of 771. Conversely, this number was up from 761 in 2012.
Despite the improvements in customer satisfaction, first-time homeowners are still unfamiliar with the loan options made available to them. According to the study, 61 percent of first-time home buyers indicated that their loan representative clearly explained their options and that these options were completely understood, compared with 74 percent of repeat home buyers and 81 percent of refinancing customers.
However, while first-time buyers remain less clear on loan terms, their overall satisfaction was higher than that of repeat buyers. According to the previously mentioned scale, first-time buyers exhibited a score of 772 in overall satisfaction while repeat buyers peaked at 757. The lowest on the list of satisfied clients were those looking to refinance. This may be attributed to their familiarity with the process or their particular situation.
Not surprisingly, the use of electronic documentation seems to have dramatically increased customer satisfaction during the mortgage process. Closing satisfaction among the eight percent of customers who closed their mortgage using electronic documents in person averages 830, while satisfaction among the 84 percent of those who closed with paper documents in person is 772.
First-time home buyers were more likely to incur additional fees because of their lack of familiarity with the process. According to Craig Martin, director of the financial services practice at J.D. Power, “First-time buyers often have questions and should not be afraid to ask prospective lenders about the specifics of the mortgage process and how they will be kept informed. Much of the stress with borrowing comes from a lack of information and knowledge during the process. Asking when you will be updated and how that information will be provided are two key questions that may help improve the borrowing experience.”
According to the survey, the following lenders ranked the highest in customer satisfaction:
- Quicken Loans
- Branch Banking & Trust Co. (BB&T)
- U.S. Bank
- PNC Mortgage