J.D. Power: Mortgage Customer Satisfaction Improves, but Loan Boom Reveals ‘Foundation Cracks’

J.D. Power, Costa Mesa, Calif., said overall customer satisfaction with primary mortgage originators improved throughout most of 2019 but dropped off significantly in the second quarter as loan origination volume surged.

The company’s 2019 U.S. Primary Mortgage Origination Satisfaction Study also reported Quicken Loans ranked highest in mortgage origination satisfaction for the 10th consecutive year

John Cabell, Director of Wealth and Lending Intelligence with J.D. Power, said the report calls out the industry’s inability to maintain consistently high levels of customer satisfaction throughout swings in the credit cycle as key to understanding the current challenges mortgage lenders face.

“Mortgage originators have been consistently transforming their businesses by adding self-service technology tools and reducing customer-facing staff, but when put to the test by an unexpected surge in refinancing volume, this approach fell short of customer expectations,” Cabell said. “It is critical that originators get the balance right between tech and staffing to be able to deal with the swings in loan volume that can dramatically change from month to month.”

Key findings of the 2019 study:

Customer satisfaction inversely correlated to origination volume. While overall customer satisfaction with mortgage originators rose by 14 points (on a 1,000-point scale) from 2018, those satisfaction levels declined sharply in the second quarter as total mortgage origination growth rate climbed 54% from the previous quarter. Overall satisfaction fell to 853 in Q2 from 869 in the first quarter, with a particularly higher decline among customers buying a home than among those refinancing.

Much of loan origination process managed manually via email and phone. Despite the industry’s push toward digital self-service tools and mobile apps, the lion’s share of customer interaction is occurring via email (70% use rate) and phone (63% use rate). Just 15% of customers indicate using their mortgage originator’s mobile app.

–Real-time status updates are key to effective digital communication. Overall satisfaction scores are 140 points higher, on average, when mortgage customers are provided–and use–real-time access to the status of their loan via an online portal than when no such access is provided.

–Intermediaries negatively influence the experience. Overall satisfaction with their lender and trust are significantly lower among customers who worked with their lender through a broker or real estate agent/builder. Involvement of these third-party intermediaries drops satisfaction by as much as 40 points and trust by as much as 50 points. These differences underscore the ongoing challenges that lenders have in controlling the loan experience.

–Many refinance customers open to alternative financing options. Nearly two-thirds (63%) of all mortgage customers chose to refinance their loan for more favorable terms. Among the remaining 37%–those looking to consolidate debt or cash out equity–nearly half considered other product options such as home equity loans and personal lines of credit.

Quicken Loans ranked highest in mortgage origination satisfaction for a 10th consecutive year, achieving a score of 880. Fairway Independent (865) ranked second and Guild Mortgage Co.  (864) ranked third. The study can be accessed at https://www.jdpower.com/resource/us-primary-mortgage-origination-satisfaction-study.