Survey: Home Buyers Value In-Person Even Amid Shift to Digital
TD Bank, Cherry Hill, N.J., released its annual Mortgage Service Index, noting while a record number of homeowners report their most recent home buying experience was excellent, their appetite for resources and guidance throughout the mortgage process is stronger than ever.
The survey said despite rate uncertainty and limited inventory, home buyers remain optimistic in the current environment. Of those surveyed, 83 percent said it’s a good time to buy a home and 30 percent are “very likely” or “extremely likely” to buy a home in the next three years. This was particularly true for the New York City/Long Island market, where 48 percent said they are extremely likely to purchase a home in the next year or so.
The survey also noted the number of homeowners who applied for a mortgage online has increased from one in eight (13 percent) in 2014 to more than one in five (21 percent) this year, demonstrating a gradual shift to the online channel. Sixty percent said the entire mortgage process lasted four weeks or less–a record high for the number of borrowers completing the process within the span of just a month.
“Digital platforms are speeding up mortgage processing on the front and back ends,” said Rick Bechtel, Head of U.S. Residential Lending for TD Bank. “When borrowers leverage online platforms for providing documents and completing necessary forms, we have found it reduces information intake time by more than 60 percent on average.”
The survey reported the proportion of consumers who rated their home buying experience as excellent has doubled from 16 percent in 2014 to 32 percent this year. At the same time, 30 percent said the experience was very or extremely stressful, a figure which has remained stable since 2014.
Despite the proliferation of home buying resources online, the survey said fewer consumers today believe they have enough resources to educate themselves on the mortgage process than three years ago (82 percent in 2019 versus 90 percent in 2016). For the first time in six years, the top three sources of information used by homebuyers did not include online sources. This year’s respondents instead turned to realtors (51 percent), in-person representatives at their local bank (42 percent) and family/friends (38 percent), signaling that prospective buyers are seeking personalized advice and guidance.
“Today, homebuyers can search online for the basics of the mortgage process, leading to remarkably more informed borrowers than we saw even a decade ago. But the reality is home buying requires navigating financial options, legal obligations, local guidelines and complex processes that occur on tight timelines,” said Bechtel. “It’s up to mortgage bankers to provide borrowers with expert, personalized guidance to reduce stress and create clarity as they make one of the most significant financial decisions of their lives.”
Other survey findings:
–Nearly one-third (30 percent) of homeowners incurred $2,000 or more in unexpected charges during the home buying process.
–Nearly three-fourth (74 percent) of homeowners took out a 30-year fixed rate or 15-year fixed rate mortgage, yet 52 percent plan to stay in their home for 10 years or less.
–Forty-two percent of homeowners are unaware of affordability programs, which Bechtel said was “significant,” considering the increasing number of buyers contributing less than 20 percent to a down payment. In 2016, nearly half (48 percent) of homeowners said they put down 20 percent or more, as compared to just 36 percent in 2019.
