Mortgage shopping's digital divide.

Author:Deggendorf, Steve

The continued evolution of online technology tools is likely to allow consumers to more easily find the right mortgage to suit their needs. Improved technology could help mortgage borrowers find the right mix of rate, fees, risk, features and service so they experience higher long-term satisfaction with their mortgage choice. [paragraph] This, in turn, could yield significant changes to mortgage shopping on a scale comparable to what has already occurred in the travel and retail industries, where we now expect to be able to go online and relatively easily and transparently find the right product. [paragraph] Given the likely impact technology could have on the mortgage industry, Fannie Mae's Economic and Strategic Research Group collected data on this topic through two different studies. [paragraph] The studies found distinct differences in the degree to which technology was used in the mortgage-shopping process between higher- and lower-income consumers as well as between recent and non-recent mortgage borrowers.

The studies also found a shared desire among all groups to use online technology more in the future.

We define lower-income consumers as people with family incomes of

The findings also suggest that there may be opportunities for online tools to improve the ability of all borrowers to shop for a mortgage.

In-person or online

Late in 2012, to gain a better understanding of mortgage shoppers, we collected data from an online panel of consumers. These consumers--approximately 3,600 in total--had either obtained a mortgage in the past four years or were intending to get a mortgage in the next 18 months. This study included first-time and repeat buyers as well as refinancers.

We found that technology use was one of the biggest differentiating factors among the different segments of mortgage shoppers. It was especially highlighted by differences between income groups.

Results showed that lower-income consumers are more likely to say that they prefer in-person interactions while mortgage shopping than higher-income consumers. In particular, we asked consumers about gathering information, choosing a lender and completing their application while mortgage shopping (see Figures 1, 2 and 3).


Growing interest in using online technology

During the second quarter of 2013, we collected additional data on mortgage shopping and online technology use through Fannie Mae's...

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