How Online Mortgage Websites Turned Friendly Homebuyers into an Angry Mob
Bait and switch is the name of the game
Just like searching for homes, most queries about mortgages start online. According to a consumer trends report by Zillow, 87% of homebuyers (across all generations) use an online resource at some point in their search for a home to buy. And more than 80% of that traffic comes from mobile.
The Zillow Group Report on Consumer Housing Trends - Zillow Research
To shine a light on how Americans approach home-related decisions, Zillow Group conducted the most comprehensive…
A recent study by Google and Chase examined how and what homebuyers are searching for specifically when it comes to mortgages. “The data shows search activity for first-time homebuying mortgages are at an all-time high, and affordability continues to reign as the top priority for perspective buyers.”
Are solutions addressing the problems?
Homebuyers likely expect their mortgage related questions to lead them to various types of lenders or to a destination with comprehensive information about interest rates and fees.
But the experience homebuyers are being presented with can be a little bit troubling considering the questions they’re actually asking.
According to the Google report, here are some of their top concerns:
- “How much mortgage can I afford”
- “Affordability calculator”
- “What is a good credit score”
Most of these queries (when directly typed into google) generate a list of endless results thinly veiled as unbiased information, but which are really designed to gather contact information and personal financial details which can then be “scored” and sold the highest bidder.
Many websites start by collecting answers to the same questions.
- “What’s your credit score?”
- “How much is your down payment?”
- “Please enter your social security number”
- “What’s your email address and phone number?”
Data from these questions don’t generate a sleek digital home loan application or move a user along the process so much as create a marketplace for popular websites to send mortgage leads to lenders.
And while these questions might seem typical for any home loan application, the experience doesn’t exactly match up with a user’s search intent and certainly doesn’t represent the beginning of an application or a transaction.
Unfortunately, completing these forms results in the beginning of an all-out assault on a user’s inbox (and their sanity) by a persistent cadre of lenders who pay for the chance to shove marketing automation down their throats.
Marketplaces don’t even try to hide it
Take a look of the terms of service for LendingTree, a popular online lending exchange. Is this what consumer empowerment really looks like?
“Any loan inquiry you submit is NOT an application for credit. Rather, it is an inquiry to be matched with Lenders to receive condition loan offers from Lenders.”
The main problem with how systems are designed today is that they’re not actually qualifying users, but truly packaging them up and selling them as a commodity.
Not only are consumers voluntarily giving away their right to privacy, but the the experience is still completely lacking, frustrating, and disheartening. What gives?
Not all loan products are the same
When banks compete you should win. And in most cases — you do.
But this mostly holds true when evaluating one-dimensional products like savings accounts, credit cards and CD’s with fixed interest rates and fees. Credit decisions for these products can be made in seconds from a 1-screen application. It actually feels pretty slick.
Mortgages are multi-dimensional products with variable interest rates, fees, and points which require more scrutiny than terms for simple financial products. Most home loans take 40 days or more to close.
So why are we designing experiences around home loans that feel the same as signing up for credit cards? Doesn’t a more robust product demand a more robust first-touch and shouldn’t users decide who they share personal financial information with and when?
The promise of a consumer marketplace for home loans is broken. What once looked like radical consumer empowerment has evolved into a lead generation arbitrage for corporations.
Improving the online home loan application experience
Homebuyer qualification and lead generation don’t have to be mutually exclusive. When people first started thinking about online mortgage experiences, MySpace was still king and people were raving about Blackberries. The online mortgage experience hasn’t kept pace with innovation over the last 10 years.
The technology now exists that allows consumers to automatically collect supporting docs, fill out a electronic loan application, check credit scores and get real pre-approvals in an experience that they fully control.
No more annoying banner ads chasing them around the internet. No more phone calls from unfamiliar lenders. No more faxing or emailing personal financial details.
We’re willing to bet that lenders prefer dealing with more substantial inquiries, but for that to happen we must marry modern technology that helps gauge inbound borrower interest and use it to match users to products, companies, and workflows that make sense and empower them.
It’s not just about doing good for the consumer experience; it makes great business sense as well.