With most prospective borrowers doing online research before beginning the mortgage process, home lenders can see big benefits from changes in their digital lending processes.
Between five and 10 years ago, borrowers who first conducted online research before contacting a mortgage lender represented 57 percent of all borrowers.
But fast forward to the past 12 months, and the share of borrowers who sought more information about home lending before making contact has soared to 92 percent.
That is according to Ellie Mae Inc., which reported the findings in its study, Connecting with Borrowers Online.
The findings were determined based on a survey of more than 500 consumers who took out a home loan between 2008 and 2018. Generation X, people who are between 35 and 54 years old, accounted for 43 percent of the respondents, while Millennials made up 29 percent, and baby boomers represented 28 percent.
Among the topics being researched by consumers are the lowest interest rates, loan qualification amount and trustworthy lenders.
Ellie Mae noted that borrowers on loans to finance a home purchase are twice as likely to spend more than 10 hours researching online than refinance borrowers.
When it comes to first reaching out to a lender, more than a third of respondents said they initiated contact online, with the share rising to 46 percent in the past year from a fifth five to 10 years ago. Refinancing borrowers were 21 percent more likely to reach out to a lender online than purchase borrowers, while Millennials were twice as likely as baby boomers.
The telephone was cited as the first point of contact by 30 percent of the respondents, while 18 percent first initiated contact in person.
The most popular online activity, comparing loan options, was done by 59 percent of those surveyed. Bank statements were uploaded by just over half, while nearly half uploaded application data.
Interestingly, 48 percent ordered or paid for an appraisal offline but would have preferred to do it online. At least 40 percent wish they had pre-qualified or obtained a pre-approval letter online.
Lenders provided an online portal for sharing documents to 71 percent of borrowers — a significant metric given that borrowers who were provided the portal were two times more likely to say technology improved the loan process.
“Borrowers today expect a simple online application that guides them step-by-step through the loan process,” Ellie Mae Executive Vice President of Corporate Strategy Joe Tyrrell stated in the report. “But high-tech and human-touch are equally important. Borrowers still want to speak with someone knowledgeable when they have questions or concerns.”
