US Mortgage Lenders Improve Again

With interest rates at a record low, US customer satisfaction with home mortgage lenders has increased for the second consecutive year, according to the recent J.D. Power and Associates 2004 Home Mortgage Study(SM).

Of thirty lenders rated, last year's top lender USAA once again ranks highest in overall customer satisfaction, and is top on all four of the individual factors contributing to this, which in order of importance are: day-to-day administration of the account; billing and payment process; customer-initiated contact experience; and the loan origination process.

In second place behind USAA are Branch Banking & Trust, then SunTrust, Countrywide and Wells Fargo, Countrywide making a big improvement over last year. Other successes are Bank One, with the largest year-over-year improvement, and new entry U.S. Bank. Many smaller, often regional lending institutions (grouped as 'other (specified)' in the ranking), also perform very well in the study.

Likelihood to recommend mortgage providers drops away rapidly as satisfaction ratings fall below ten out of ten. Fewer than half of consumers who rate their lender a '9' and fewer than one in four who rate their lender an '8' will recommend their lender to others.

Switching between providers does not seem to lead to satisfaction. Among the 26% who go through the transition to a new lender, overall levels are lower and only one-third indicate that they would definitely consider using their new service provider for their next mortgage.

'We're coming off a period where the personal mortgage industry has experienced unprecedented levels of activity, galvanized by the lowest interest rates in nearly 40 years', says Jeremy Bowler, director of the finance and insurance practice at J.D. Power. 'The industry continues to make improvements in customer satisfaction and some individual lenders have made dramatic year-over-year jumps. Provided their lenders have not failed to meet expectations in some way, most mortgage customers are pretty happy right now'.

'There are literally thousands of lenders out there for someone seeking a home loan' according to Bowler - meaning that bad experiences drive customers away quickly and create bad word-of-mouth.

This puts increased pressure on lenders at times of high demand. For many financial institutions, the answer has been to form strategic relationships with other lenders. USAA, for example, has a longstanding relationship with PHH/Cendant Corporation and more recently with GMAC Mortgage Corporation.

The 2004 Home Mortgage Study is based on responses from more than 11,900 home mortgage customers and involves the largest national home mortgage providers.

All articles 2006-23 written and edited by Mel Crowther and/or Nick Thomas unless otherwise stated.

• J. D. Power and Associates
• All news
• MrWeb info