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A new report from Fannie Mae says the use of hybrid or completely digital mortgage processes has increased from 40 percent of loans in the first quarter of 2020 to 67 percent in the first quarter of 2024.
Homebuyers surveyed for the study highlighted the speed and ease of the process being the main benefits of the digital mortgage process, and 90 percent of survey respondents said they were “very interested” or “somewhat interested” in a more or fully digital mortgage process. That’s up from 63 percent in a 2021 Fannie Mae survey. And while older homebuyers were significantly less likely than those under age 44 to prefer an online method, as were higher-income buyers compared to lower-income buyers, the Fannie Mae report said interest “remains high across all the demographic groups surveyed.”
“This study shows that homebuyers are extremely interested in further digitizing the mortgage process, with most citing time and simplicity benefits,” the report stated. “When offered the opportunity to grant lenders or TSPs access to their online bank accounts, most homebuyers agreed. We think this is an important finding and suggests that broad and proactive efforts by lenders to offer these tools would be well-received by consumers – and could help normalize further digitization efforts in the future.”
But while the mortgage process has increasingly gone digital, the same can not be said for verification of key factors such as income as well as funds for closing costs or a down payment. 65 percent of respondents told Fannie Mae they were not asked to provide access to their bank accounts online.
While data security is a valid concern, only 4 percent of homebuyers declined to provide access to their online banking due to privacy concerns. More than half of recent homebuyers who granted access to their online bank accounts as part of applying for their current mortgage told Fannie Mae that they would use the digital verification technology again for their next mortgage.
“While privacy and data security concerns remain paramount, we believe effective communication between loan officers and homebuyers is the key to driving greater adoption of this technology,” the report added. “It’s critical that potential borrowers clearly understand what digital verification is, how it works, its benefits, and how its risks are managed and mitigated. Equipped with the knowledge that digital verification technology is there to make an often-complicated mortgage process simpler and safer, we think even more consumers would use it to their advantage.”
Fannie Mae’s report was based on a survey of 1,201 first-time and repeat homebuyers who purchased a home with a mortgage acquired by Fannie Mae between January 2023 and November 2023.
