The ICE Mortgage Technology Survey found that 84% of homeowners who applied for a mortgage in the past five years considered only one or two lenders before closing a deal.
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A survey of more than 2,000 consumers by ICE Mortgage Technology shows that finding the lowest interest rate is the most important factor when consumers choose a mortgage lender, but most people still don’t bother to compare.
ICE’s 2024 Borrower Insights Survey surveyed equal numbers of homeowners and renters and found that the most important factors when choosing a lender boiled down to cost, speed and the variety of terms and products to choose from.
Source: ICE Mortgage Technology 2024 Borrower Insights Survey.
While 68% of respondents said finding the lowest interest rate was the most important factor in choosing a lender, and 48% cited lower lender fees, closing time (33%) and variety of loan terms and products (32%) also played a role in the decision-making process.
Only 21% of respondents said a real estate agent’s recommendation was one of the most important factors in choosing a lender, while only 17% cited the availability of a web or mobile app as important.
Source: ICE Mortgage Technology 2024 Borrower Insights Survey.
Given that costs can vary significantly between mortgage lenders, 84% of homeowners who applied for a mortgage in the past 5 years considered only one (36%) or two (48%) lenders before closing a deal. This may come as a surprise.
Last year, Freddie Mac published research showing that borrowers who got two rate quotes could save up to $600 a year on their mortgage payments, while getting at least four rate quotes could save more than $1,200 a year.
Another study from the Consumer Financial Protection Bureau (CFPB) highlights the importance of shopping for FHA, VA and jumbo mortgages because of the wide variation in interest rates offered by lenders offering these types of loans.
However, the ICE Mortgage Technology Survey found that only 13% of borrowers compared rates from three lenders, and only 3% compared rates from four or more lenders.
In releasing the July 2024 ICE Mortgage Monitor report, ICE said the findings underscore the need for “lenders and servicers to use all available tools to anticipate the future needs of current customers and avoid losing business to more aggressive, technology-savvy competitors.” “Report.
Mortgage products and pricing engine make it easy for borrowers to obtain customized rates from multiple lenders, and credit bureaus won’t penalize borrowers for rating a store within 30-45 days.
So why don’t home buyers shop around to get the best deal?
A Zillow Home Loans survey found that among those unwilling to shop around for the best rate:
- 30% worry getting multiple offers will hurt their credit score
- 24% were satisfied with the first lender they contacted
- 19% say shopping takes too much time and effort
- 15% think all lenders offer the same interest rates
- 14% are embarrassed to share their financial information with lenders
The Consumer Financial Protection Bureau warned last year that some comparison sites that claim to help borrowers research interest rates may be breaking the law by directing borrowers to lenders that pay them traffic.
The CFPB also offers a mortgage rate explorer tool powered by Curinos, which collects data directly from lenders. Once a lender is identified, the CFPB also advises consumers to compare the costs of obtaining title insurance and settlement services.
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