Record low interest rates have driven U.S. home sales to a 14-year high and spurred a 200 percent annual increase in refinancing. The boom, however, has exposed underlying weaknesses in mortgage originators’ digital strategies, according to a new report.
The J.D. Power 2020 U.S. Primary Mortgage Origination Satisfaction Study shows originators’ shortcomings in the areas of self-service tools for applications and approvals, frequent communication, and long loan processing times could negatively affect customer satisfaction over time. J.D. Power is based in Troy.
“It’s been a complicated year for the mortgage industry,” says Jim Houston, managing director of consumer lending and automotive finance intelligence at J.D. Power. “Between surging customer volumes on the origination side, an influx of customer inquiries on the servicing side, and a workforce that has been completely displaced by the pandemic, resources have been stretched to their limits. That strain is showing up in slower loan processing times, missed opportunities to communicate, and unreliable self-service tools.
“While some of these shortcomings may have been opportunities in prior years, current market conditions and customer satisfaction metrics indicate that mortgage originators need to look hard at fixing them if they want to stay viable.”
Overall customer satisfaction rose six points on a 1,000-point scale this year, driven largely by the competitiveness of interest rates. However, satisfaction in several client service attributes, such as loan processing time, ease of self-service interaction, and helpfulness of customer service, declined from the previous year.
In 2020, the average loan refinancing transaction took 42 days from application to closing, up from 39 days in 2019. Accordingly, refinancing customer satisfaction with the timeliness of the application process and length of time from final loan approval to closing declined year over year.
The number of customers using self-service channels for loan applications and approvals increased five percentage points this year while the number of customers using personal service channels (in-person, phone, and email) declined five percentage points. Despite the increase in use, satisfaction with the application and approval process among customers using self-service digital channels declined 10 points.
The more lenders communicate with customers during the application, closing, and onboarding processes, the more customer satisfaction improves. Customers with the highest level of satisfaction (929) receive daily communications from their lender. This occurs 11 percent of the time.
Detroit-based Rocket Mortgage by Quicken Loans ranked highest in mortgage origination satisfaction for an 11th consecutive year, with a score of 883. Bank of America and Chase both ranked second with a score of 860.
The study measures overall customer satisfaction based on performance in four factors: application/approval process, communication, loan closing, and loan offerings. The study was fielded from June-August and is based on responses from 4,300 customers who originated a new mortgage or refinanced within the past 12 months.
“At Rocket Mortgage, one of our ISMs – the core philosophies which define our culture and guide our decision making – is ‘Every Client. Every time. No Exceptions. No Excuses,’” says Jay Farner, CEO of Rocket Mortgage. “J.D. Power’s recognition is further confirmation we are consistently meeting our clients’ needs and living up to this ISM. This accolade comes after we experienced record-breaking loan volume in the first two quarters of 2020. Results like this can only be achieved with the combination of world-class technology and the absolute passion and pride of our team members.”
In addition to ranking No. 1 overall, Rocket Mortgage ranked best in class in every category that makes up the total score. According to the study, 92 percent of clients surveyed said Rocket Mortgage team members completely explained the application and approval process. Additionally, 94 percent of Rocket Mortgage clients surveyed said the application-related documents were easy to understand.
The study showed 80 percent of clients surveyed said they will definitely consider Rocket Mortgage for their next home purchase, compared to an industry average of 71 percent.
In July, Rocket Mortgage was named No. 1 in J.D. Power’s survey of mortgage servicers for the seventh consecutive year, leading the list every year it has been eligible. This brings Rocket Mortgage’s total top rankings from J.D. Power to 18, the most of any mortgage lender in the history of the study.
A Rocket Mortgage application can be completed in as few as eight minutes, and clients can go from creating an account to signing closing documents in as few as eight days. On average, Rocket Mortgage clients close more than two weeks faster than the overall industry.
The company has provided more than $1 trillion in home loans to clients throughout the nation.
J.D. Power is a global company offering consumer insights, advisory services, and data and analytics. It has offices in North America, Europe, and Asia Pacific.