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Mortgages and HELOCs - US - August 2014

“While most young Millennials – aged 18-24 – are not ready to purchase a home, they soon will be, and it is more important to them to work with a lender they trust than it is to get the best interest rate. This priority differentiates them from older borrowers who historically focus only on interest rates. Lenders need to understand this key difference in order to attract the younger segment.”
– Robyn Kaiserman, Financial Services Analyst

This report answers the following questions:

  • Is trust still an issue for the big banks?
  • How to increase usage of mobile mortgage apps?
  • An opportunity in HELOC resets?
  • Is it time for reverse mortgages?
The mortgage industry is in constant flux because the housing market is in constant flux.
 
After a few bad years that followed the housing crisis, there have been a few good years and now the market is slowing down again. However, while some experts believe the housing market will strengthen, albeit modestly, others believe it will stall or perhaps even weaken in the near future. Whichever way it goes, lenders need to keep up with borrowers’ preferences, whether they are for specific products, technological advances, or customer service needs.
 
This report examines key factors in the mortgage and HELOC industry, including:
  • The changing demographics that are driving – and will continue to drive – the housing market; 
  • How technology has changed the competitive mix of the mortgage market; 
  • New online and mobile functionalities that are making it easier for consumers to search for, apply, and make payments on their mortgages.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Data sources
        • Consumer survey data
          • Direct marketing creative
            • Abbreviations and terms
              • Abbreviations
                • Terms
                • Executive Summary

                    • The market
                      • Originations continue downward trend
                        • Mortgage origination industry is deconsolidating
                          • Market drivers
                            • Shrinking unemployment may help housing demand
                              • Figure 1: US unemployment rate, June 2009-June 2014
                            • Home prices are on the rise
                              • Figure 2: S&P/Case Shiller National Home Price Index, March 2009-March 2014
                            • Homeowners are regaining equity
                              • Figure 3: US residential real estate values, mortgage debt, and homeowner equity, 2008-Q1 2014
                            • Millennials are getting ready to buy
                              • Figure 4: Home purchase plans, by generation, May 2014
                            • Leading companies
                              • Figure 5: Change in mortgage origination market share of top five originators, Q2 2012 vs. Q2 2014
                            • The consumer
                              • Interest in online mortgage capabilities
                                • Figure 6: Interest in online mortgage capabilities, by age, May 2014
                              • Most are satisfied with loan interest rate
                                • Figure 7: Any satisfaction with lender, May 2014
                              • Most believe home has increased in value
                                • Figure 8: Attitude toward value of own home, May 2014
                              • What we think
                              • Issues and Insights

                                  • Is trust still an issue for the big banks?
                                    • Issues:
                                      • Implications:
                                        • How to increase usage of mobile mortgage apps?
                                          • Issues:
                                            • Implications:
                                              • An opportunity in HELOC resets?
                                                • Issues:
                                                  • Implications:
                                                    • Is it time for reverse mortgages?
                                                      • Issues:
                                                        • Implications:
                                                        • Trend Application

                                                            • Inspire trend: FSTR HYPR
                                                              • Inspire trend: Locavore
                                                                • Inspire trend: Access All Areas
                                                                • Market Size

                                                                  • Key points
                                                                    • Residential mortgage originations
                                                                      • Figure 9: 1-4 family mortgage originations, 2007-15
                                                                    • Mortgage origination industry is deconsolidating
                                                                      • Figure 10: Mortgage originations for top originators, Q1 2012-Q2 2014
                                                                    • HELOCs are coming back while balances are paid down
                                                                      • Figure 11: HELOC Balances, Q1 2012-Q1 2014
                                                                    • Mortgage debt continues to decline, albeit slowly
                                                                      • Figure 12: Total outstanding mortgage debt, 1-4 family homes, Q4 2010-Q1 2014
                                                                      • Figure 13: Housing debt vs. non-housing debt, Q1 2010, Q1 2011, Q1 2012, Q1 2013, Q1 2014
                                                                    • Use of reverse mortgages declining
                                                                      • Figure 14: Number of HECMs endorsed by the FHA, 2002-12
                                                                  • Market Drivers

                                                                    • Key points
                                                                      • Shrinking unemployment may spark growth in housing demand
                                                                        • Figure 15: US unemployment rate, June 2009-June 2014
                                                                      • Housing market is strengthening
                                                                        • Home prices are on the rise
                                                                          • Figure 16: S&P/Case Shiller National Home Price Index, March 2009-March 2014
                                                                        • Homeowners are regaining equity
                                                                          • Figure 17: US residential real estate values, mortgage debt, and homeowner equity, 2009-Q1 2014
                                                                        • Housing starts are trending up
                                                                          • Figure 18: Single family housing starts, May 2013-May 2014(p)
                                                                        • Credit is becoming more available
                                                                          • Millennials: Next big market?
                                                                            • Figure 19: Population growth estimates, by generation, 2009, 2014 and 2019
                                                                            • Figure 20: Home purchase plans, by generation, May 2014
                                                                          • Aging of America
                                                                            • Figure 21: US population by age, 2009, 2014 and 2019
                                                                          • Dodd-Frank legislation will make it harder to get a mortgage
                                                                            • Cash sales are 40% of the market
                                                                            • Innovations and Innovators

                                                                              • Key points
                                                                                • Chase My New Home(SM) app
                                                                                  • NextJob helps banks help delinquent mortgagees
                                                                                    • Re/Max Northern Illinois introduces advanced mobile app
                                                                                      • LendingTree launches new mortgage shopping option
                                                                                        • Wells Fargo launching a new HELOC product
                                                                                        • Marketing Strategies

                                                                                          • Key points
                                                                                            • Overview of the brand landscape
                                                                                              • The growth of incentives
                                                                                                • Figure 22: Capital one bonus mile refinancing direct mail ad, 2014
                                                                                                • Figure 23: Discover $25,000 sweepstakes mortgage offer email ad, 2014
                                                                                              • Brand analysis: Wells Fargo
                                                                                                • Figure 24: Wells Fargo brand analysis
                                                                                              • Online
                                                                                                • Figure 25: Wells Fargo My FirstHome (SM) trailer
                                                                                              • Social media
                                                                                                • Video
                                                                                                  • Figure 26: Wells Fargo home preservation workshop video, 2012
                                                                                                  • Figure 27: Wells Fargo neighborhoodLift (SM) program video, 2014
                                                                                                • Direct mail
                                                                                                  • Figure 28: Wells Fargo mortgage/purchase and renovate loan direct mail ad, 2014
                                                                                                  • Figure 29: Wells Fargo mobile mortgage app direct mail ad, 2014
                                                                                                  • Figure 30: Wells Fargo Home Rebate Card direct mail ad, 2014
                                                                                                • Email
                                                                                                  • Figure 31: Wells Fargo online mortgage capabilities email ad, 2014
                                                                                                  • Figure 32: Wells Fargo mortgage review email ad, 2014
                                                                                                • Brand analysis: JPMorgan Chase
                                                                                                  • Figure 33: Chase brand analysis, 2014
                                                                                                • Online
                                                                                                  • Social media
                                                                                                    • Video
                                                                                                      • Figure 34: Chase introduction to buying a home video, 2013
                                                                                                      • Figure 35: Chase 15- vs. 30-year mortgage video, 2013
                                                                                                    • Direct mail
                                                                                                      • Figure 36: JPMorgan Chase automatic mortgage payment direct mail ad, 2014
                                                                                                      • Figure 37: Chase Mortgage/Mynewhome app direct mail ad, 2014
                                                                                                    • Email
                                                                                                      • Figure 38: Chase My New Home (SM) email ad, 2013
                                                                                                      • Figure 39: Chase mortgage email ad, 2014
                                                                                                    • Mobile
                                                                                                      • Figure 40: Chase mortgage mobile ad, 2013
                                                                                                    • Print
                                                                                                      • Figure 41: Chase My New Home (SM) print ad, 2013
                                                                                                    • Brand analysis: Bank of America
                                                                                                      • Figure 42: Bank of America brand analysis, 2014
                                                                                                    • Online
                                                                                                      • Social media
                                                                                                        • Video
                                                                                                          • Figure 43: Bank of America rent vs. buy video, 2014
                                                                                                          • Figure 44: Bank of America refinancing video, 2013
                                                                                                        • Direct mail
                                                                                                          • Figure 45: Bank of America relationship credit direct mail ad, 2014
                                                                                                          • Figure 46: Bank of America refinancing direct mail ad, 2014
                                                                                                          • Figure 47: Bank of America refinancing email ad, 2014
                                                                                                        • Brand analysis: Quicken Loans
                                                                                                          • Figure 48: Brand analysis, Quicken Loans
                                                                                                        • Online
                                                                                                          • Social media
                                                                                                            • Video
                                                                                                              • Figure 49: Quicken Loans random acts of saving you money video, 2014
                                                                                                              • Figure 50: Quicken Loans Abraham Lincoln car chase television commercial, 2014
                                                                                                              • Figure 51: Quicken Loans hole-in-one promotion television ad, 2014
                                                                                                            • Direct mail
                                                                                                              • Figure 52: Quicken Loans smart reasons mortgage direct mail ad, 2014
                                                                                                              • Figure 53: Quicken Loans prequalification letter direct mail ad, 2014
                                                                                                            • Email
                                                                                                              • Figure 54: Quicken Loans mortgage email ad, 2014
                                                                                                              • Figure 55: Quicken Loans mortgage calculator email ad, 2014
                                                                                                            • Online ads
                                                                                                              • Figure 56: Quicken Loans jumbo mortgage loan online ad, 2013
                                                                                                              • Figure 57: Quicken Loans underwater mortgage loan online ad, 2014
                                                                                                            • Mobile
                                                                                                              • Figure 58: Quicken Loans mortgage first mobile ad, 2014
                                                                                                          • Homeownership Rates

                                                                                                            • Key points
                                                                                                              • Most people own their home
                                                                                                                • Figure 59: Ownership of primary residence, by gender, May 2014
                                                                                                              • Age 25 is the turning point for home ownership
                                                                                                                • Figure 60: Ownership of primary residence, by age, May 2014
                                                                                                              • Homeownership jumps at household income of $50K
                                                                                                                • Figure 61: Ownership of primary residence, by household income, May 2014
                                                                                                              • Homeownership is highest among Whites
                                                                                                                • Figure 62: Ownership of primary residence, by race/Hispanic origin, May 2014
                                                                                                            • Do Renters Plan to Purchase?

                                                                                                              • Key points
                                                                                                                • Most renters have no immediate purchase plans
                                                                                                                  • Figure 63: Renters' intent to purchase, by gender, May 2014
                                                                                                                • Older Millennials are a prime mortgage target
                                                                                                                  • Figure 64: Renters' intent to purchase, by age, May 2014
                                                                                                                • Half of higher-income renters plan to purchase a home soon
                                                                                                                  • Figure 65: Renters' intent to purchase, by household income, May 2014
                                                                                                              • Type of Loan Held

                                                                                                                • Key points
                                                                                                                  • Most homeowners currently have a mortgage
                                                                                                                    • Figure 66: Type of loan held, by gender, May 2014
                                                                                                                  • Home equity loans most popular among Millennials
                                                                                                                    • Figure 67: Type of loan held, by age, May 2014
                                                                                                                  • Young men most likely to have HELOCs
                                                                                                                    • Figure 68: Type of loan held, by gender and age, May 2014
                                                                                                                  • HELOCs most popular among high household incomes
                                                                                                                    • Figure 69: Type of loan held, by household income, May 2014
                                                                                                                • Source for Finding Current Mortgage Lender

                                                                                                                  • Key points
                                                                                                                    • Personal relationships are more effective than mortgage ads
                                                                                                                      • Figure 70: Source for finding current mortgage lender, by gender, May 2014
                                                                                                                    • Young people rely less on banks to find their mortgage
                                                                                                                      • Figure 71: Source for finding current mortgage lender, by age, May 2014
                                                                                                                    • Income plays almost no role
                                                                                                                      • Figure 72: Source for finding current mortgage lender, by household income, May 2014
                                                                                                                  • Loan Application Plans/Use of Apps/Mortgage Experience

                                                                                                                    • Key points
                                                                                                                      • The challenge for primary banks
                                                                                                                        • Figure 73: Loan application plan/use of apps/mortgage experience, by gender, May 2014
                                                                                                                      • Millennials most likely to be in the market for a HELOC or home equity loan
                                                                                                                          • Figure 74: Loan application plan/use of apps/mortgage experience, by age, May 2014
                                                                                                                        • Income plays a role in plans to apply for a HELOC or home equity loan
                                                                                                                          • Figure 75: Loan application plan/use of apps/mortgage experience, by household income, May 2014
                                                                                                                        • Hispanics more likely to be in HELOC market next year
                                                                                                                          • Figure 76: Loan application plan/use of apps/mortgage experience, by race/Hispanic origin, May 2014
                                                                                                                      • Important Factors When Choosing a Mortgage Lender

                                                                                                                        • Key points
                                                                                                                          • Primary goal: Getting the lowest interest rate possible
                                                                                                                            • Figure 77: Any important factors when choosing a mortgage lender, by gender, May 2014
                                                                                                                          • For young people, trust is more important than cost
                                                                                                                              • Figure 78: Any important factors when choosing a mortgage lender, by age, May 2014
                                                                                                                            • Amount of down payment most concerning to young women
                                                                                                                              • Figure 79: Any important factors when choosing a mortgage lender, by gender and age, May 2014
                                                                                                                            • Bundled products more likely to appeal to higher-income households
                                                                                                                              • Figure 80: Any important factors when choosing a mortgage lender, by household income, May 2014
                                                                                                                            • Blacks more interested in mobile capabilities
                                                                                                                              • Figure 81: Any important factors when choosing a mortgage lender, by race/Hispanic origin, May 2014
                                                                                                                            • Bundled products sway two thirds of mortgage customers
                                                                                                                                • Figure 82: Important factors when choosing a mortgage lender, by source for finding current mortgage lender, May 2014
                                                                                                                            • Customer Satisfaction

                                                                                                                              • Key points
                                                                                                                                • More satisfied with interest rate than closing fees
                                                                                                                                  • Figure 83: Any Satisfaction with lender, by gender, May 2014
                                                                                                                                • Satisfaction with loan officer advice is not high
                                                                                                                                  • Figure 84: Any Satisfaction with lender, by age, May 2014
                                                                                                                                • Satisfaction with interest rates higher than with customer service among highest household incomes
                                                                                                                                  • Figure 85: Any Satisfaction with lender, by household income, May 2014
                                                                                                                                • Overall, Blacks more satisfied than Whites
                                                                                                                                  • Figure 86: Any Satisfaction with lender, by race/Hispanic origin, May 2014
                                                                                                                              • Consumer Attitudes about the Value of their Home

                                                                                                                                • Key points
                                                                                                                                  • Most believe their home values have increased
                                                                                                                                    • Figure 87: Attitudes toward value of own home, by gender, May 2014
                                                                                                                                  • For most homeowners, their home is not their largest financial investment
                                                                                                                                      • Figure 88: Attitudes toward value of own home, by age, May 2014
                                                                                                                                    • Higher household incomes more likely to believe their home value has increased
                                                                                                                                      • Figure 89: Attitudes toward value of own home, by household income, May 2014
                                                                                                                                    • Blacks are twice as likely as Whites to believe their home is worth less now
                                                                                                                                      • Figure 90: Attitudes toward value of own home, by race/Hispanic origin, May 2014
                                                                                                                                  • Attitudes about Area Home Values

                                                                                                                                    • Key points
                                                                                                                                      • Most are optimistic about home values
                                                                                                                                        • More optimists among aged 55+
                                                                                                                                          • Figure 91: Attitudes toward area home values, by age, May 2014
                                                                                                                                        • More optimism among people with higher household incomes
                                                                                                                                          • Figure 92: Attitudes toward area home values, by household income, May 2014
                                                                                                                                        • Optimism about the value of homes differs by race/ethnicity
                                                                                                                                          • Figure 93: Attitudes toward area home values, by race/Hispanic origin, May 2014
                                                                                                                                      • Appendix – Other Useful Consumer Tables

                                                                                                                                        • Homeownership rates
                                                                                                                                          • Figure 94: Ownership of primary residence, by gender and age, May 2014
                                                                                                                                          • Figure 95: Ownership of primary residence, by five generations groups, May 2014
                                                                                                                                        • Do renters plan to purchase?
                                                                                                                                          • Figure 96: Renters' intent to purchase, by gender and age, May 2014
                                                                                                                                          • Figure 97: Renters' intent to purchase, by race/Hispanic origin, May 2014
                                                                                                                                        • Most homeowners currently have a mortgage
                                                                                                                                          • Figure 98: Type of loan held, by gender and age, May 2014
                                                                                                                                          • Figure 99: Type of loan held, by four employment groups, May 2014
                                                                                                                                        • Type of loan held
                                                                                                                                          • Figure 100: Type of loan held, by race/Hispanic origin, May 2014
                                                                                                                                        • Source for finding current mortgage lender
                                                                                                                                          • Figure 101: Source for finding current mortgage lender, by gender and age, May 2014
                                                                                                                                        • Loan application plan/use of apps/mortgage experience
                                                                                                                                          • Figure 102: Loan application plan/use of apps/mortgage experience, by gender and age, May 2014
                                                                                                                                          • Figure 103: Loan application plan/use of apps/mortgage experience, by type of loan held, May 2014
                                                                                                                                        • Customer satisfaction
                                                                                                                                          • Figure 104: Any satisfaction with lender, by gender and age, May 2014
                                                                                                                                        • Attitude toward value of own home
                                                                                                                                          • Figure 105: Attitude toward value of own home, by gender and age, May 2014
                                                                                                                                        • Attitude toward area home values
                                                                                                                                          • Figure 106: Attitudes toward area home values, by gender, May 2014
                                                                                                                                          • Figure 107: Attitude toward area home values, by gender and age, May 2014
                                                                                                                                      • Appendix – Trade Associations

                                                                                                                                        Companies Covered

                                                                                                                                        To learn more about the companies covered in this report please contact us.

                                                                                                                                        Mortgages and HELOCs - US - August 2014

                                                                                                                                        £3,174.67 (Excl.Tax)