Customer Satisfaction with Mortgage Lenders Rises but Signs Point to Challenges Ahead, J.D. Power Finds

Fairway Independent Mortgage Corporation Ranks Highest in Customer Satisfaction

The average 30-year mortgage rate in the United States reached 7.79%¹ in October, the highest level since November 2000, forcing homebuyers and their lenders to get creative when it comes to finding ways to finance their home. According to the J.D. Power 2023 U.S. Mortgage Origination Satisfaction Study,^SM released today, many lenders have had to pivot in the past year to meet the needs of a purchase-heavy market and have successfully delivered on key elements of the borrowing experience, resulting in significantly higher overall customer satisfaction.

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J.D. Power 2023 U.S. Mortgage Origination Satisfaction Study (Graphic: Business Wire)

That said, this improved service level could be hard for most to maintain as the effect of aggressive cost-cutting is starting to take a toll and market conditions are unlikely to improve in the foreseeable future.

“Two years ago, the mortgage market was an ultra-low-rate goldmine in which lenders were making big profits and the primary challenge was keeping up with demand,” said Craig Martin, executive managing director and global head of wealth and lending intelligence at J.D. Power. “It’s the opposite today with high rates and a lack of affordable homes leading to a limited number of eligible borrowers. To effectively compete in the future, lenders need to set themselves apart by focusing on addressing customers’ unique challenges and meeting their needs rather than selling a product.”

Following are some key findings of the 2023 study:

• Overall satisfaction rises despite record high rates: Overall customer satisfaction with mortgage lenders is 730 (on a 1,000-point scale), up 14 points from a year ago, even as the average mortgage rate has climbed to its highest level in 23 years and overall lending volume has declined.
• Beyond rates: Almost one-third (31%) of mortgage customers say they selected their lender solely because they offered the lowest interest rate. More than two-thirds (69%) chose lenders for other reasons, such as personalized service and ability to help navigate the loan market.
• Lenders engaging earlier but more is wanted: Many lenders are finding that by engaging with borrowers earlier in their shopping journey, they can retain those customers throughout the process. Overall, 38% of mortgage customers say they started working with a lender when they first thought about buying. The percentage of borrowers who say their loan rep should have been more involved has risen to 40% from just 29% a year ago.
• Struggling first-time homebuyers: While overall customer satisfaction with the lending process is up this year, the increase has been driven primarily by repeat buyers. Overall satisfaction among first-time homebuyers, however, is down significantly. This reflects the complex lending environment and considerable challenges customers are facing.

“The value equation for mortgage originators has shifted from instant approvals and lightning-fast processing to helpful advice and creative problem solving,” said Bruce Gehrke, senior director of wealth and lending intelligence at J.D. Power. “Lenders that manage this transition well have a great opportunity to build customer goodwill and limit defection by showing customers they understand their unique needs and the challenges of the current market.”

Study Ranking

Fairway Independent Mortgage Corporation ranks highest in mortgage origination satisfaction, with a score of 776. Rocket Mortgage (759) ranks second and Citi (756) ranks third.

The U.S. Mortgage Origination Satisfaction Study measures overall customer satisfaction based on performance in six factors (in alphabetical order): communication; digital channels; level of trust; loan offering meets my needs; made it easy to do business with; and people. The 2023 study was fielded from November 2022 through August 2023 and is based on responses from 9,191 customers who originated a new mortgage or refinanced within the past 12 months.

For more information about the U.S. Mortgage Origination Satisfaction Study, visit https://www.jdpower.com/business/financial-services/us-mortgage-origination-satisfaction-study.

See the online press release at http://www.jdpower.com/pr-id/2023164.

About J.D. Power

J.D. Power is a global leader in consumer insights, advisory services and data and analytics. A pioneer in the use of big data, artificial intelligence (AI) and algorithmic modeling capabilities to understand consumer behavior, J.D. Power has been delivering incisive industry intelligence on customer interactions with brands and products for more than 50 years. The world's leading businesses across major industries rely on J.D. Power to guide their customer-facing strategies.

J.D. Power has offices in North America, Europe and Asia Pacific. To learn more about the company’s business offerings, visit JDPower.com/business. The J.D. Power auto shopping tool can be found at JDPower.com.

About J.D. Power and Advertising/Promotional Rules: www.jdpower.com/business/about-us/press-release-info

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¹ Freddie Mac

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