Harris Interactive, on behalf of LendingTree recently conducted an online survey of 1,380 homeowners concluded that only 51% of mortgaged homeowners actually comparison shopped for their loans.
This is amazing when you consider that when shopping for big ticket items, 89% of Americans comparison shop. What’s bigger than your home?
Given the fact that variations between lenders can be as much as 1.5% for a 30 year fixed, these homeowners missed out on some potential savings.
Doug Lebda, founder and CEO of LendingTree note:
"Deciding on a mortgage is likely the most important financial decision consumers will ever make, yet borrowers are more often than not taking the first offer that comes their way, failing to fully capitalize on low rates. It is important for borrowers to understand that they have the power to choose which loan and which lender to use. It is acceptable to negotiate with lenders and to walk away if you are not fully satisfied. Consumers need to be engaged in the mortgage process to secure the best deal."
The survey revealed that during the first week of August, 2012, quotes for a consumer with a 759 credit score ranged from 3.25% to 4.625% - that’s a huge variance. On a moderate loan amount of $260,000, the cost savings to a borrower would be $214 per month, $2,568 annually and over the life of the loan...? $74,000 dollars!
"Many people approach the process of getting a mortgage with apprehension, thinking they have very little control of the end result. But rushing through the process without comparing loan offers could be a costly mistake," Lebda continued. "LendingTree provides borrowers with an easy-to-use, educational tool to help consumers compare multiple mortgage loan offers and to choose the loan and the lender that best suits their needs and financial situation. Our goal is to ensure every borrower is confident they have received the best possible value on their mortgage."
Perhaps some of this trend can be attributed to the current atmosphere of doubt and uncertainty when it comes to financing home purchases. Lenders have been tight with the purse strings since the GFC (global financial crisis) so perhaps many of these individuals who are not comparing loans are simply relieved that they can obtain a loan.
Perhaps a restructuring of the mortgage broker industry is in order - for example, changing incentives to finding consumers the best deals. What do you think?