Mortgage lenders need to lean in to consumer expectations

ServiceLink survey shows what's important to consumers

When it comes to consumers’ growing desire for a seamless, fully digital home-buying experience, coupled with COVID-19’s influence on buying behaviors, it’s safe to say there truly is “no turning back.”

The pandemic had a profound impact on the home-buying experience. Lenders that may have been holding out on embracing automation and technology were forced to adapt at breakneck speed to continue to serve customers. From hybrid appraisals to virtual showings to RON/RIN, the digital mortgage process took center stage over the last year. Technology that had long been available, but never saw the level of adoption the industry would have hoped for, was now in high demand.

What’s more, ServiceLink’s latest research shows that consumers are increasingly seeking out lenders that can deliver seamless, digital buying experiences akin to those they already enjoy in other aspects of their life (more on that below). And why shouldn’t they? From ordering food to buying goods to managing their finances, consumers can do it all from the palm of their hand, without ever having to leave their house. Why should the mortgage process be any different?

While those within the housing sector know the home purchase process is a bit more complex than ordering food online, it doesn’t mean today’s consumers don’t expect that same level of automation, speed and transparency.

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As the industry continues to experience this seismic shift to digital, ServiceLink aimed to dive deeper on consumers’ evolving expectations of the home-buying and refinance process, particularly over the last year. Tapping into a network of 1,000 homeowners nationwide with the launch of a consumer survey, the State of Homebuying Report offers insight into what trends could be here to stay in 2022 (and beyond).

Desire to take a self-serve approach

The survey data supported the notion that today’s consumers are willing to take the reins and self-serve during certain aspects of the home-buying process, from application to close. For example, from a scheduling standpoint, 58% of survey respondents stated they would be very likely/likely to self-schedule their appraisal, inspection and/or closing appointment online if the option was available to them.

Additionally, a collective 79% would be willing to eSign all or some of their mortgage documents with another 52% stating they would be very willing/willing to conduct their closing via video conferencing (Skype, Zoom, etc.) if the option was available to them. Anything that can accelerate the timeline on the path to close is being widely embraced, and these options will continue to be highly sought after by homebuyers in 2022.  

Technology as the new table stakes

Now that homebuyers have had a taste of what is possible with technology during the home-buying process, there’s simply no putting the genie back into the bottle. More than two thirds of survey respondents (68%) said their perception of the home-buying process was improved by technology, citing convenience/ease of use and time savings as the top benefits of leveraging tech.

Digital natives Gen Z/millennials, unsurprisingly, leveraged technology the most compared to their Gen-X and baby boomer counterparts (89% Gen Z/millennials; 71%, Gen X; 33%, baby boomers). And as online lenders continue to emerge in the home lending space, with sleek and easy-to-use platforms designed with consumer experience in-mind, technology infused into every aspect of the homebuying process will only continue to be in-demand in 2022.

Growing demand for transparency

For many homebuyers, their confidence diminishes the closer they get to the closing table. This could be attributed to the fact that the streamlined, digital capabilities they enjoyed at the initial point of sale do not extend to the closing process. Our data reveals a few sticking points for survey respondents where they wanted less burden and more transparency: 35% wanted less paperwork, 33% wanted more transparency around fees, 33% wanted to not have to provide the same documentation multiple times and 30% wanted more transparency into the steps and timeline.

How can lenders lean into these trends?

As millennials reach peak homebuying age (with Gen Z close behind) expectations for seamless, transparent, digital homebuying experiences will only continue to grow. Here’s a few thought starters for lenders on how to lean into emerging trends to drive consumer satisfaction, earn their repeat and referral business and remain competitive in this rapidly evolving landscape:

  • Increase speed and automation. Consider how you can extend digital touchpoints down the mortgage lifeline by identifying new opportunities for enhancements, with an eye on getting borrowers to the closing table faster. For example, can you integrate a full or hybrid e-closing experience, providing borrowers with the opportunity to sign all or some of their documents from the comfort of their home? Can you leverage AI and machine learning to speed up title decisioning? Any area that can help you increase speed to close should be examined. Also, consider going straight to the source: survey your borrowers to ask them how you can improve.
  • Remove areas of friction, confusion. Things that may seem simple on the surface – such as scheduling an appraisal or closing – can actually be a source of friction for a borrower. For example, scheduling the exact date and time of your appraisal inspection from an online scheduling portal versus waiting days for the appraiser to call and schedule the appointment, often requiring you to leave voicemails and play phone tag to sync up with the appraiser. Which would you prefer if you were a borrower? Think like a borrower to identify ways you can make the process easier and more enjoyable for them.
  • Aim to be a triple threat – education, technology and service. With all the technology at consumers’ fingertips today, they still put a great deal of trust in their family and friends for advice. In fact, 54% of all respondents cited family and friends as their most important resource when starting the homebuying process. This demonstrates the opportunity that exists for lenders to emerge as a trusted source of education for borrowers who need support, while also showcasing the continued power of word of mouth to earn repeat and referral business. Consider how you can build borrower trust, support them throughout the purchase process and provide them with helpful online tools and videos to help break down complexities. In addition, work to streamline communication and be available to them through their preferred communication channels.
  • Provide opportunities to self-serve. There are many ways a lender can do this. Outside of some of the more obvious opportunities – like offering hybrid appraisals, self-scheduling, RON/RIN, etc. – also think through enhancements you can make to your website or mobile app that enable and encourage self-service. For example, can you include a form fill, chat bots, an FAQs section, how-to videos or thought leadership articles? Make it easier for borrowers to interact with you on your website.
  • Increase transparency. Be fully transparent about what to expect throughout the entire homebuying journey – from timeline to fees to roadblocks as they pop up. Keep borrowers informed, and ask their preferences about how and when they wish to be looped in. In addition, increasing automation and online tools available to borrowers, as mentioned above, helps to foster more transparent processes for lender and borrower alike.

Phil King is vice president, principal product manager, EXOS Valuations at ServiceLink.

This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.

To contact the author of this story:
Phil King at [email protected]

To contact the editor responsible for this story:
Sarah Wheeler at [email protected]

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