New data reveals changing borrower preferences

The current housing market is hard to describe, hard to predict and hard to navigate for borrowers, renters and lenders alike.

The latest numbers are mixed. New data released in late March 2023 shows that US home prices — as measured by the seasonally adjusted Case-Shiller Home Price Index — fell for the seventh straight month in January. They are now 3% off their peak on a seasonally adjusted basis. But they are still up 37% from three years ago. Federal Housing Finance Authority data showed home prices up 0.2% from December to January, and up 5.3% in the course of 2022.

For mortgage lenders, all this boils down to one set of questions: What will borrowers do in 2023? Will they stay in place, or take advantage of falling rates and prices to relocate? Or will they look at falling rates as an opportunity to refinance?

And, most important of all: What can you do for them — to meet their current needs and to create long-lasting relationships?

Through our 2023 Borrower Insights Survey, we sought to find answers to these questions and provide insights that our customers can use to both win more business and stay ahead of their competition.

At the heart of the data: What consumers want and need

The survey results allowed us to examine borrowers’ priorities and preferences. We found that today’s borrowers want:

  • Flexibility: When it comes to financing a mortgage, more than half (53%) cited flexible loan options among their most important considerations.
  • Savings: Two-thirds (67%) said saving money was one of their top three concerns for financing a mortgage; more than half cited low lender fees (56%).
  • Education and guidance: Renters continue to think that owning a home is more difficult than it is. Half (53%) believe it’s necessary to provide more than a 10% down payment.
  • High tech and high touch: Fewer than one in 10 borrowers want a fully digital experience (9%), although many welcome the convenience of digital processes and services.
  • Different kinds of outreach based on different experiences: Experienced borrowers (those who have taken out five or more mortgages in their lifetime) favor digital offerings. Those who bought when interest rates were low (one to two years ago) are most likely to be cautious about selling their home.
  • Trusted referrals: Borrowers, especially the least experienced, relied on referrals to choose lenders, turning to their Realtors, family or friends.

Steps you can take to create lasting relationships

Now that you have this information, what should you do with it? Here are five key steps lenders should consider taking to be more successful both in current and future market conditions:

  • Invest in your online offering. Even the oldest and least tech-savvy borrowers want and expect the convenience of digital portals and processes to be part of your service portfolio.
  • Digitize your back office. Your technology investment should not be confined to customer-facing offerings. Smart back-office automation will free you and your people up for the all-important task of maintaining relationships.
  • Invest in relationships with realtors. Borrowers are reliant on referrals from Realtors, friends and family. Developing and maintaining relationships is essential — the quality of your referral network could be the margin of difference. Remember that “high tech, high touch” is what nearly all borrowers expect and want.
  • Know your borrower. Understanding borrowers’ preferences by age and experience will enable you to “meet them where they are.”
  • Stay in touch. It’s worth noting the value of relationships over time. An ongoing relationship will generate repeat business and referrals years from now.

In the mortgage industry, we can always count on change. Five years ago, no one was anticipating a global pandemic, inflation or an interest rate surge. The home lending marketplace will be different again in five years’ time or sooner. By leveraging the right technology and maintaining a human touch throughout the borrower experience, you can ensure that, in an unpredictable future, a steady and growing stream of business finds its way to your door.

To access more valuable findings from the survey, download our free “What Borrowers Want” eBook available now.