March 11th, 2014
A recent study by TD Bank found that more consumers view the homebuying process with positive feelings.
According to the 2014 Mortgage Service Index, a national survey of 1,500 consumers who purchased a home within the past decade, 69 percent of respondents rated their experience with their bank or lender as “excellent” or “very good.” Compared to 2013′s survey, the figure is up from 66 percent. With regard to the homebuying process overall, 62 percent gave the experience a positive rating. Sixty-six percent had a similar response for the mortgage-approval process.
The MSI tracked other specific areas of the homebuying process, with all measures reaching above 50 percent for excellent or very good ratings:
Homebuying remains a stressful venture
Despite the positive ratings from survey respondents regarding homebuying, many still reported that stress was an issue. Compared to the previous MSI, more respondents reported that the process was “extremely” or “very” stressful, rising to 30 percent from 24 percent. Stress was lower among those who reported a positive overall experience, and 85 percent of this group said they had a positive experience with their lender.
Michael Copley, executive vice president of retail lending at TD Bank, noted that one means of lowering homebuyer stress is for lenders to provide more detailed information relating to mortgage rates, loan terms and the mortgage process overall.
Lenders post high figures for satisfaction
Although respondents reported positive interactions with their lenders – with regard to accessibility, responsiveness and transparency – they cited a need for a more streamlined mortgage process. Among respondents who bought a home within the past two years, 70 percent reported that both their lenders’ responsiveness and transparency was excellent or very good. Sixty-eight percent had a positive experience with accessibility.
“With the implementation of new regulation and an anticipated rise in interest rates, lenders should be cognizant of homebuyers’ needs and anxieties, by being accessible, reliable and responsive,” Copley said.
Simplicity falls short of expectations
However, simplicity and easy-to-use online tools had lower rankings of 56 percent and 51 percent, respectively, indicating a need for improvement in these areas. Even with these shortcomings, lenders had better scores in other areas: Explaining mortgage rates and terms scored at 59 percent, while instilling confidence throughout the process, helping buyers understand the process, and explaining the mortgage and available options all scored at 58 percent.
“The results of this year’s TD Bank Mortgage Service Index indicate that there is still a need to provide consumers with more information and clarity in the home financing process,” Copley said.
Tips for selecting a mortgage provider
According to the MSI, homebuyers considered two banks or lenders when choosing a home loan provider. This is one of the more challenging steps of the homebuying process and goes beyond the lowest interest rate. Here are considerations for choosing between lenders: