TROY, Mich.— With mortgage rates at their highest levels since November 2000, the new J.D. Power 2023 U.S. Mortgage Origination Satisfaction Study has found many lenders have had to “pivot” in the past year to meet the needs of a purchase-heavy market.
According to J.D. Power, those lenders have successfully delivered on key elements of the borrowing experience, resulting in significantly higher overall customer satisfaction.
“That said, this improved service level could be hard for most to maintain as the effect of aggressive cost-cutting is starting to take a toll and market conditions are unlikely to improve in the foreseeable future,” according to J.D. Power.
The Key Findings
Among the key findings, according to J.D. Power:
- Overall satisfaction rises despite record high rates. Overall customer satisfaction with mortgage lenders is 730 (on a 1,000-point scale), up 14 points from a year ago, even as the average mortgage rate has climbed to its highest level in 23 years and overall lending volume has declined.
- Beyond rates. Almost one-third (31%) of mortgage customers say they selected their lender solely because they offered the lowest interest rate. More than two-thirds (69%) chose lenders for other reasons, such as personalized service and ability to help navigate the loan market.
- Lenders engaging earlier but more is wanted. “Many lenders are finding that by engaging with borrowers earlier in their shopping journey, they can retain those customers throughout the process,” according to J.D. Power. “Overall, 38% of mortgage customers say they started working with a lender when they first thought about buying. The percentage of borrowers who say their loan rep should have been more involved has risen to 40% from just 29% a year ago.
- Struggling first-time homebuyers. While overall customer satisfaction with the lending process is up this year, the increase has been driven primarily by repeat buyers, according to J.D. Power. Overall satisfaction among first-time homebuyers, however, is down significantly. This reflects the complex lending environment and considerable challenges customers are facing.
‘Shift’ in Equation
“The value equation for mortgage originators has shifted from instant approvals and lightning-fast processing to helpful advice and creative problem solving,” said Bruce Gehrke, senior director of wealth and lending intelligence at J.D. Power. “Lenders that manage this transition well have a great opportunity to build customer goodwill and limit defection by showing customers they understand their unique needs and the challenges of the current market.”
Study Ranking
According to J.D. Power, Fairway Independent Mortgage Corporation ranks highest in mortgage origination satisfaction with a score of 776. Rocket Mortgage (759) ranks second and Citi (756) ranks third.
The study can be found here.
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