Record low interest rates have driven not just mortgage activity but also customer satisfaction with mortgage originators, according to a recent J.D. Power survey. But longer closing times, infrequent communication and problems with digital channels could eventually affect satisfaction.
Overall satisfaction with mortgage originators was higher compared to last year, according to the J.D. Power 2020 U.S. Primary Mortgage Origination Satisfaction Study. While the boom in purchase and refinance activity has generally been positive for primary mortgage originators, J.D. Power said in a statement, it has also exposed weaknesses in originators’ digital strategies, weaknesses that could point to challenges in the future.
“It’s been a complicated year for the mortgage industry,” Jim Houston, managing director of consumer lending and automotive finance intelligence at J.D. Power, said in a statement. “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. While some of these shortcomings may have been 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.”
The 2020 study measured overall customer satisfaction based on performance in loan offerings, the application and approval process, communication, and loan closing. The study ran from June through August and was based on responses from 4,300 customers who originated a new mortgage or refinanced within the past 12 months.
According to the 2020 study, the industry average for overall satisfaction was 856 on a 1,000-point scale, up six points compared to 2019, driven largely by the competitiveness of interest rates offered. But satisfaction in several service attributes, including loan processing time, ease of self-service interaction and helpfulness of customer service, has declined since last year.
One area seeing a decline in 2020 was satisfaction with refinance processing times. The average loan refinancing transaction took 42 days from application to closing, according to the J.D. Power study, up from 39 days in 2019. Customer satisfaction with the timeliness of the application process as well as length of time from final loan approval to closing fell year-over-year.
While more people have been using digital self-service channels, according to the 2020 survey, customer satisfaction with these channels has declined. The number of customers using self-service channels for loan applications and approvals increased five percentage points this year, and the number of customers using in-person, phone and email for service declined five percentage points. Yet J.D. Power found that satisfaction with the application and approval process for customers using self-service digital channels declined 10 points this year.
Infrequent communication was another driver of customer dissatisfaction. The study found that customer satisfaction improved when lenders communicated more with customers during the application, closing and onboarding processes. Customers with the highest level of satisfaction (929) received daily communications from their lender. But daily communication occurred just 11 percent of the time.
Rocket Mortgage by Quicken Loans ranked highest in J.D. Power’s study for the 11th consecutive year, with a score of 883, followed by Bank of America and Chase, each scoring 860.
