Study shows mortgage process as challenging as home buying

Finicity, an open banking solutions provider based in Murray, has released its new report, “High Demand, Higher Hurdles in the Mortgage Market.” The report reveals key findings around the issues consumers face during the mortgage process and how digital solutions are starting to provide relief.

Finicity is part of the Mastercard network of financial services companies.

According to the report, 89 percent of respondents find the loan application was more stressful or as stressful as the homebuying experience.

To uncover the current pain points of the homebuying and refinancing experience, Finicity conducted a survey of 1,075 consumers, focusing on the current mortgage landscape and the consumer experience of homebuyers or those who have refinanced since April 2020.

“Buying a home should be exciting, not frustrating. And, the loan process can be a seamless end to the homebuying or refinancing experience,” said Andy Sheehan, president and chief operating officer at Finicity. “In this digital era, mounds of paperwork and lengthy processes should be a thing of the past. Many lenders do offer a partial digital loan process today, but that doesn’t mean that the customer experience is always better. Friction in the process can still remain.”

“Lenders will need to continue to refine the digital mortgage process and improve functionality to ensure an intuitive and efficient customer experience,” said Sheehan. “Open banking data provides digital verification of assets, income and employment that can drive satisfaction, reduce risk and costs in the short term, and increase customer loyalty in the long term.”

The study found that 89 percent of respondents believe the loan application experience was more stressful or equally as stressful as the homebuying experience. Seventy-two percent of respondents were surprised or very surprised at the volume of paper processes that still take place in many stages of the mortgage. And 64 percent indicated frustration with their initial loan application process, leading to hesitation in refinancing.

The study authors said the mortgage process is behind in its digitization compared to other daily tasks and areas of finance such as payment and banking apps. Moving to a digital loan process provides ease to, and even is expected of, consumers.

Only 12 percent of respondents indicated that they were uncomfortable giving permission to access their personal financial data to a lender. Borrowers who used digital verifications were half as likely to say the loan process was the most stressful part of the homebuying experience.

Consumer-permissioned op-en banking solutions allow for digital verifications throughout the mortgage process, shaving days off the entire experience. Over half (54 percent) of total respondents said it took between 30 to 60 days to go from application to close, with 16 percent indicating more than 60 days. Through the use of digital verifications, consumers can have a seamless experience that skips the paperwork and saves them time overall.