With mortgage rates at an all-time low, U.S. home sales have risen to a 14-year high. Now, some existing homeowners are racing to take advantage of the super-low rates too, resulting in a 200% rise in refinancing applications this year.
As such, mortgage lenders have faced a hectic schedule at a time of increased business, when many have also been forced to move the bulk of their work to online systems.
“It’s been a complicated year for the mortgage industry,” says Jim Houston, managing director of consumer lending and automotive finance intelligence at J.D. Power. “Between surging customer volumes on the origination side, an influx of customer inquiries on the servicing side, and a workforce that has been completely displaced by the pandemic, resources have been stretched to their limits. That strain is showing up in slower loan processing times, missed opportunities to communicate, and unreliable self-service tools.”
Houston said that while some of these “shortcomings” may have been viewed as opportunities in prior years, current market conditions and customer satisfaction metrics indicate that “mortgage originators need to look hard at fixing them if they want to stay viable.”
Still, customer satisfaction with primary mortgage originators rose 6 points this year, which was largely driven by competitiveness over offered interest rates, according to J.D. Power’s newly released 2020 U.S. Primary Mortgage Origination Study. The average refinancing processing time rose to 42 days from application to closing (up from 39 days in 2019). J.D. Power also found a notable increase in the number of customers using self-service channels for loan applications and approvals.
Lender satisfaction seemed to be directly linked to frequency of communication from the lender, according to J.D. Power. The more lenders communicate with customers during the application, closing, and onboarding processes, the more customer satisfaction improved, they found.
Overall, Rocket Mortgage by Quicken Loans ranked the highest in mortgage origination satisfaction for the 11th consecutive year, followed by Bank of America and Chase (which tied for second), according to J.D. Power.
The 2020 U.S. Primary Mortgage Origination Satisfaction Study measures overall customer satisfaction from 4,300 customer responses based on the following four metrics: application/approval process, communication, loan closing, and loan offerings.