Fannie Mae: Mortgage Lenders ‘Missing Out’ on Mobile Opportunities

Fannie Mae said despite “promising opportunity” for mortgage lenders to use mobile channels, many mortgage lenders prefer more traditional methods of marketing, potentially missing out on key audiences.  

In an FM Commentary (, Fannie Mae Director of Business Strategy Steve Deggendorf said the lower priority that lenders place on mobile channels, and the differences in lender and consumer views on mobile tool functionality, could place lenders at risk of not meeting consumer demand or encouraging new entrants to address this growing demand at the expense of existing firms.  

“Getting the right mix of traditional (person-to-person), online and mobile channels and tools may be a key to future success,” Deggendorf said.  

The paper noted mobile devices are widely and increasingly used for a variety of transactions, including mobile payments and banking. And while mobile activity is less common in the mortgage space than other consumer finance market segments, the opportunity is promising.  

A recent Pew Research Center study said 68 percent of U.S. adults have a smartphone, up from 35 percent in 2011; tablet computer ownership edged up to 45% among adults. Smartphone ownership is nearing the saturation point with some groups: 86 percent of those ages 18-29 have a smartphone, as do 83 percent of those ages 30-49 and 87 percent of those living in households earning $75,000 and up annually.  

Fannie Mae research found that home buyers in increasing numbers are going online to get their mortgage using both personal computer and newer mobile-based technologies. In particular data suggest that consumers’ desire to shop and apply for a mortgage via a mobile device (smartphones and tablets) in the future is more than twice the current usage.  

“Most lenders employ a combination of traditional and digital marketing channels to advertise their mortgage products, but mobile apps are used much less often,” Deggendorf said. “Lenders also say they will continue to emphasize investment in traditional over digital, and especially mobile, channels in the future.”  

The paper said nearly three out of four lenders do not offer a mobile app to help consumers shop for a mortgage, and just 40 percent of those lenders who do not offer a mobile app plan to make one available over the next 12 months. The one-third of lenders not developing an app cite the high cost of IT investment, information security risks, compliance issues, and slow consumer adoption as their top reasons. Another quarter of lenders who do not offer a mobile app do not know or are unsure about their next steps to build a mobile app.  

However, other data suggest recent homebuyers’ appetite for using mobile devices for mortgage shopping may imply faster adoption than what many lenders assume, especially those who are not building a mobile mortgage app. Although only 12 percent and 6 percent of recent homebuyers, respectively, say they have used mobile devices to get a mortgage quote and to fill out a mortgage application, 30 percent and 20 percent, respectively, say they would like to use a mobile device in the future to perform these mortgage activities.  

In addition, consumers’ and lenders’ mobile functionality preferences show some gaps. Whether lenders currently have a mobile app or not, they say the most important mobile functionality include allowing consumers to get pre-qualification, connect with loan officers, fill out application forms and track the application process. Consumers are also more interested in using mobile devices to obtain a mortgage quote, giving this functionality a much greater priority than lenders do. Consumers also are less interested in using mobile devices to fill out a mortgage application than lenders seem to be in providing this functionality.  

The paper also noted security concerns are a common theme among both consumers and lenders. Nearly one-third of lenders cite security risks as the primary reason for not developing an app, while online security among recent homebuyers is the biggest concern (over 50 percent) related to applying for and closing a mortgage online.  

“There remains an important role for face-to-face contact,” Deggendorf said. “Many consumers still prefer speaking to an expert at certain points during the mortgage shopping process. At the same time, mortgage lenders should consider the appropriate mix of traditional, online and mobile mortgage channels and functionality to address the evolving consumer preferences of the particular market segments they serve.”