Demand for online mortgage functions is growing, creating an opportunity for lenders, according to a study by Synergistics Research (Atlanta). Consumers now consider the Internet a convenient tool in their search for the right mortgage, the firm reports.
According to Synergistics, which surveyed 1,000 consumers across all income groups, the most common online mortgage activity is comparing interest rates (52 percent of respondents). However, online mortgage applications are gaining traction -- one in seven respondents said they applied for a mortgage online.
"The extent to which the Internet is so widely used, and the extent to which those who have a mortgage actually applied online, is significant," says Synergistics COO Genie Driskill, who notes that banks have been slow to exploit the Web as a channel for mortgage products. "Activity around mortgages is finally growing online."
Shopping for a mortgage has remained one of the few financial services performed at a branch. However, as consumers become more familiar with online financial services, this comfort likely will carry over into the mortgage space. As a result, "People are using online calculators to determine their monthly payments; they're able to perform scenarios using various interest rates; and they're gathering information and actually applying online," Driskill observes.
Still, Driskill notes, consumers are most comfortable dealing with a trusted financial institution for their mortgages -- both online and offline. "Forty-two percent [of respondents] said they went to a specific financial institution Web site [to shop for mortgages]," Driskill relates. "It's natural for people to feel more comfortable with their bank."
Attractive Customer Segment
Consumers' shifting attitudes about online mortgages present an opportunity for innovative banks, Driskill adds, noting that seven in 10 survey respondents said they performed some kind of mortgage-related activity online. While providing online mortgage services is a value-add for a lender's customers, it also is a means of courting a highly desirable customer segment, she asserts -- according to the Synergistics study, the percent of mortgage holders who applied online for a mortgage increases to 25 percent for consumers whose home values exceed $500,000.
"The higher value of the home is correlated with higher household income," explains Driskill. "These people are usually more educated and are more likely to try innovative things," making them an attractive customer segment.
"It's a given [that banks] have to provide [mortgage] information online," Driskill adds. "And if you're not taking applications online, you should certainly consider it." *