Homebuyer Challenges Offer An Opportunity For Lenders: J.D. Power
Survey finds lenders that have remained staffed up and invested in digital processes that streamline the mortgage process are crushing their competitors on customer satisfaction.
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Wild swings in mortgage rates and high home prices have homebuyers feeling frustrated, but mortgage lenders can score points by helping them navigate the challenging landscape.
Those who don’t risk losing market share to competitors who have remained staffed up and invested in digital processes that streamline the process of taking out a home loan, according to an annual survey by J.D. Power.
After surging last year, overall customer satisfaction with mortgage lenders declined three points in 2024, to 727, according to the latest J.D. Power U.S. Mortgage Origination Satisfaction Study.
J.D. Power takes six performance factors into account when tallying overall mortgage lender customer satisfaction on a 1,000-point scale: communication, digital channels, level of trust, loan offering meets my needs, made it easy to do business with, and people.
Last year’s 14-point surge in the average overall customer was driven primarily by repeat buyers, with overall satisfaction among first-time homebuyers down “significantly.” That was a reflection of “the complex lending environment and considerable challenges” faced by consumers in 2023, J.D. Power said at the time.
In the past year, “mortgage lenders have noticeably trimmed their staffing levels, making it more challenging to deliver the same level of highly personalized customer service that drove the gains in customer satisfaction a year ago,” the consumer research firm said.
The 2024 study was fielded from August 2023 through September 2024 and is based on responses from 7,534 customers who originated a new mortgage or refinanced within the past 12 months.
Topping the 2024 rankings were Prosperity Home Mortgage (772), Movement Mortgage (761) and Bank of America (760).
J.D. Power 2024 Mortgage Origination Satisfaction Study
Source: J.D. Power
Lenders who scored above the study average included Citi (759), AmeriSave Mortgage (758), Rocket Mortgage (747), Fairway Independent Mortgage (746), Chase (745), PNC (738) and Wells Fargo (731).
The factors showing the biggest year-over-year declines in customer satisfaction were digital channels (-8 points), communication (-5), and loan offering met my needs (-5).
“Interpersonal relationships with local brand reps [are] critical to satisfaction,” J.D. Power said.
When lenders’ local brand representatives were directly involved in the mortgage origination process, overall satisfaction scores were 40 points higher, the research firm said.
With mortgage rates going up and down and home prices near all-time highs in many markets, lenders score points when they get involved earlier in the process — when they are first thinking about purchasing a home — and provide guidance throughout the process.
Satisfaction scores were 107 points lower when lenders don’t get until customers are getting ready to apply for a mortgage, and 133 points lower among borrowers who don’t rely on their lender’s expertise.
Last year, rates on 30-year fixed-rate mortgages climbed to a post-panic peak of 7.83 percent registered on Oct. 25, 2023, according to rate lock data tracked by Optimal Blue.
Mortgage rate rollercoaster
This year, mortgage rates have been on something of a roller coaster ride. After dropping more than a percentage point to a hair over 6.5 percent in January, rates bounced back to a 2024 high of 7.27 percent on April 25 as the Federal Reserve struggled to keep inflation in check.
As inflation began to cool, rates descended to a 2024 low of 6.03 percent on Sept. 17, in anticipation that the Fed would soon begin cutting rates. But when the Fed did start cutting short-term rates on Sept. 18, policymakers said they would do so cautiously, and rates on 30-year fixed-rate loans climbed back to 6.84 percent on Nov. 6.
Bruce Gehrke
“The variability in rates and higher costs for buyers increases the importance of understanding consumers’ individual situations,” J.D. Power executive Bruce Gehrke said, in a statement. “Consistently, we’re seeing that lenders that play an active advisory role in helping their clients navigate the current market are earning significantly higher customer satisfaction, loyalty and advocacy scores than those that are treating mortgage lending as a transactional process.”
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