An article by Reuters points out that Quicken Loans Inc. was once a little known mortgage provider, but since the boom in refinancing, it has become the third largest lender in the country.
As the market for refinancing pretty much fulfilled, a new challenge is developing for Quicken Loans. Now it needs to entice potential home buyers to arrange their mortgage loans over a website. This might not initially seem to be a problem, but this is a potentially emotional transaction and many people will feel happier arranging their loan with someone they can actually see and can talk to, as this is more comforting and reassuring when making such a large purchase.
With the mortgage market shifting more towards home purchases, most people will choose to go and see a mortgage advisors as these types of loans are rarely arranged online. The article by Reuters asks whether Quicken’s substantial increase in market share was due to merely timing combined with historically low interest rates, or if the culture of deals made on the promise of a handshake is beginning to change.
Now Quicken is seeking to increase its purchases mortgage market through the use of a tool called Rocket Mortgage. There are also suggestions that Quicken wishes to boost its presence with consumer data and digital marketing, as its founder, Dan Gilbert is trying to purchase Yahoo.
Additionally Quicken might need the support of realtors who tend to favor local mortgage advisors. Although they don’t get paid for referrals, realtors often feel more comfortable dealing with any problems that might arise if they are able to speak to someone locally. Their view is that the potential savings of using an online mortgage company isn’t worth the risk of a buyer perhaps losing their dream home. This is where Quicken could lose out, as it does not have a network of bankers who are in a position to develop relationships with realtors. In comparison, the online lender LoanDepot recently bought branch based Mortgage Master for that very reason.
Quicken doesn’t see this as being a problem as the company has invested heavily in helping to familiarise borrowers with its brand. However its business is still oriented towards refinancing which tends to be a much simpler transaction where borrowers are not at risk of losing their home. At the moment, between 25% and 35% of the company’s mortgages are used to purchase homes, compared to 34% at LoanDepot, 48% at JP Morgan Chase and 56% at Wells Fargo.