J.D. Power: Technology, Efficiency Improve Mortgage Customer Satisfaction

J.D. Power, Westlake Village, Calif., reported overall mortgage customer satisfaction increased this year as more lenders developed functional digital channels and improved operational efficiency.  

The company’s 2015 U.S. Primary Mortgage Origination Satisfaction Study said Quicken Loans ranked highest in primary mortgage origination satisfaction for a sixth consecutive year, with a score of 850, an increase of 15 points from 2014. Fifth Third Mortgage ranked second with 812, followed by Bank of America and BB&T (Branch Banking & Trust Co.) at 811 each.  

The study (http://www.jdpower.com/resource/us-primary-mortgage-origination-satisfaction-study) measured customer satisfaction with the mortgage origination experience in six factors: application/approval process; interaction; loan closing; loan offerings; onboarding; and problem resolution. Satisfaction was calculated on a 1,000-point scale.  

Overall customer satisfaction with mortgage origination averaged 793 in 2015, an increase of seven points from 2014. The increase in satisfaction is driven by a 22-point gain in the application and approval process factor, influenced by improved perceptions of the speed of the loan process. When loans close earlier than promised, satisfaction was significantly higher (866), compared to when loans close as expected (821) and when it took longer than expected (658).  

The study also reported overall satisfaction with several mortgage application-related activities, such as completing an application (799), submitting documents (804) and receiving status updates (811) was markedly higher among customers who used digital communication channels versus those who communicated via mail and fax (753, 766 and 770, respectively).  

Craig Martin, director of the mortgage practice at J.D. Power, cautioned, however, that despite the overall increase in satisfaction, mortgage lenders are under increased pressure from new loan disclosure regulations that could increase the time it takes to get a home loan while also facing increased competition from non-traditional lenders.  

“While a lot of effort has been placed on ensuring compliance with new regulations, it is imperative that lenders improve their education and communication about the impact of these changes or risk losing customers,” Martin said. “Effective communication remains one of the most important aspects of a satisfying mortgage experience, especially if the process is taking longer than it has historically.”  

Martin also noted that as the number of Millennial home buyers rises, lenders must be ready to meet their expectations. “This generation is highly digitally connected, so ongoing communication and transparency via the channels they prefer, particularly mobile, are vital,” he said.  

The reported said links between the perception of mortgage processing speed and efficiency and overall customer satisfaction are particularly noteworthy in light of the new TILA/RESPA Integrated Disclosure, a.k.a. “Know Before You Owe” or TRID regulation. “This [rule] has the potential to increase the mortgage timeline which poses a significant challenge for lenders when serving home buyers across all generations, but could be particularly challenging when dealing with Millennials who are technically savvy, always connected to the Internet and noted as being capricious consumers,” Martin said.  

Other key findings in this year’s study:  

Communication Impacts Satisfaction: Communication throughout the loan process mitigates dissatisfaction with a longer timeline. When the loan process takes more than two months, satisfaction is 686. However, when an accurate time frame estimate and proactive updates are provided in that same scenario, satisfaction is 859.

Millennials Seek Guidance: 37 percent of Millennial customers indicated that the origination process was not completely explained to them, while 58 percent indicated their options, terms and fees were not completely explained.

Effective Loan Representatives are Vital: Those loan reps who engage customers, build trust and ensure that borrowers understand each step of the process can mitigate the negative impact on satisfaction due to missing closing dates (764 missed date/effective representative vs. 511 missed date/ineffective representative).

Loans are Closing Sooner: The percentage of applications and approvals that close earlier than promised has increased to 35 percent in 2015 from 31 percent in 2014.

Satisfying Experience Leads to Recommendations and Loyalty: Providing an outstanding mortgage origination experience can generate high levels of advocacy and retention. The study said 71 percent of highly satisfied customers (overall satisfaction scores of 900 or higher) say they “definitely will” recommend their lender, while 76 percent say they “definitely will” consider reusing the same lender for their next home purchase. In comparison, only 5 percent of dissatisfied customers (scores of 699 or less) say they “definitely will” recommend and 8 percent say they “definitely will” consider reusing the lender.  

Other financial institutions with high scores included Citi Mortgage (809); U.S. Bank Home Mortgage (798); Chase (795); and PNC Mortgage (794). The industry average was 793.  

The study took responses from 4,666 customers who originated a new mortgage or refinanced within the past 12 months. The study took place between February/March and July/August.