Banks Stand to Drive Mortgage Business by Shifting to “New Normal”

Despite high levels of consumer confidence, banks stand at risk of missing an opportunity to significantly increase their mortgage businesses, according to research from Carlisle & Gallagher Consulting Group (CG).

CG’s mortgage market outlook shows that homeowner confidence is high, with 90% of respondents expecting their homes to either maintain value or grow significantly over time.

Additionally, CG’s study finds that 1 in 5 consumers expect to purchase a home in the next three years. 

But while consumer confidence is high, primary banks are not capturing their market share, as 81% of survey respondents said they have strong satisfaction levels with their primary bank, but only 39% have their mortgage with this institutions. 

The striking fact is that a large majority (70%) of respondents said they would prefer to have their mortgages with their primary bank.

Doing the math, subtract those currently holding mortgages with their primary bank (39%) from the total number who would actually want to have a mortgage with their bank (70%), and what’s left is a 31% missed opportunity, notes CG.  

The disparity can be explained by several qualms customers have toward their banks, which have prevented them from utilizing their financial institution’s mortgage services. 

Customers cited their low satisfaction levels stemmed from a variety of things, such as lack of available one-on-one guidance and difficulty in accessing a mortgage representative. 

“Customers want the stability and trust factor of their large primary bank, but will only be retained if that bank provides a customized service,” writes the study.

This customization is based on where these customers fall on the continuum of cost, trust and service. 

For banks to pick up this missed ground, the study suggests banks pay attention to three types of consumers in terms of cost consciousness, bond building, and planning information to understand expectations and requirements for the closing process.

Each of these areas, CG believes, represents the “new normal” mortgage profiles of consumers. Aligning resources that adhere to these preferences might lead to increases in production as a result.

“There is a power shift from banks to customers, who are demanding choices and more transparency into the mortgage application process,” says Tom Mataconis, vice president of consulting and practice services at CG.

Written by Jason Oliva

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