Through the first half of 2022, demand for mortgages in the United States has reached a 22-year low, according to the J.D. Power 2022 U.S. Mortgage Origination Satisfaction Study.
This follows what was a record year for mortgage volume and profits in 2021,
Among the key findings in the report is that mortgage providers have struggled to differentiate themselves in the eyes of customers, particularly as their expectations of the experience are rising and competition for their business is even more intense. The analysis found that the difference between the top- and bottom-performing lenders in overall satisfaction was just 87 points on a 1,000-point scale. That shows how commoditized the experience has become, the study said. To that point, the number one reason given for choosing a specific lender is the rate.
“There is no denying the effects of rising interest rates on mortgage demand, and this is precisely the time when lenders need to differentiate themselves as trusted advisors who can guide customers through the lending process and offer valuable counsel along the way,” Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power, said. “That means ramping up communication—keeping customers informed throughout the lending process and ensuring consistent and effective communications through all channels. Unfortunately, less than one in three customers say their lenders were able to deliver that optimal experience.”
Rocket Mortgage ranked the highest in mortgage origination satisfaction, with a score of 750, followed by Chase (736), Citi (733), and Fairway Independent (733).
The study points out that lenders are missing an opportunity as some of the key attributes that customers are seeking in their mortgage lender are expertise; guidance; communication; and overall responsiveness. Currently, just 28 percent of lenders are successfully meeting all these key criteria.
Further, less than half of mortgage customers, 48 percent, kept fully informed during all phases of the mortgage application process. Also, while there is an appetite for digital, roughly 67 percent of applicants are currently interacting with human representatives via phone.
“A rising tide of record demand and historically low-interest rates hid a lot of the challenges lenders have been facing in forging more meaningful, lasting connections with customers and moving beyond a transactional, rate-driven relationship,” Tom Lawler, head of consumer lending intelligence at J.D. Power, said. “Now, as the macroeconomic situation has reversed course, these relationship-driven attributes have become critical for lenders that want to convey a more unique value proposition and build more lifetime customers in a highly competitive marketplace.”