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Home Financing - US - March 2018

"The majority of US consumers own their own home, but mistrust of the mortgage industry continues. Home ownership rates have held relatively steady over the past few years, and while younger consumers are less likely to own their living space, home ownership is still viewed as top personal and financial priority by most. Consumers are most interested in more well-established lenders, and prospective alternatives like Google or Amazon have yet to be fully embraced. The mortgage process is viewed as intimidating, so FSIs (financial service institutions) will need to continue to work to build trust and show home ownership can be embraced by a variety of demographics."
- Jennifer White Boehm, Associate Director - Financial Services

This Report looks at the following areas:

  • Less than a third of consumers plan to purchase a home in next five years
  • Less than half of renters consider home ownership a primary goal
  • Home owners think the mortgage process is too long, intimidating

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • Overview
          • The issues
            • Less than a third of consumers plan to purchase a home in next five years
              • Figure 1: Intent to purchase home in next 5 years, December 2017
            • Less than half of renters consider home ownership a primary goal
              • Figure 2: Renter opinions on home ownership, December 2017
            • Home owners think the mortgage process is too long, intimidating
              • Figure 3: Impressions of mortgage process, by age, December 2017
            • The opportunities
              • Few owners are using the equity available in their home
                • Figure 4: Use of home equity, December 2017
              • Mobile applications welcome to a small number
                • Four in ten home buyers make sure to follow a budget
                  • Figure 5: Following a budget, by household income, December 2017
                • What it means
                • The Market – What You Need to Know

                  • Home ownership rate climbs, but not to past levels
                    • Median new home price eclipses $300,000
                      • Aging of the US a factor in home ownership stats
                      • Market Breakdown

                        • Home ownership rate climbs, but not to past levels
                          • Figure 6: Home ownership rate for the United States (not seasonally adjusted), January 2007-October 2017
                        • Median new home cost eclipses $300,000
                          • Figure 7: Median price of new homes sold in the US, 2007-17
                        • Mortgage debt takes up largest portion of consumer debt
                          • Figure 8: Total consumer debt, by debt type, Q3 2017
                        • Mortgage debt continues to grow at a moderate pace
                          • Figure 9: Total consumer mortgage debt, Q1 2012-Q3 2017
                        • Over 8 million mortgages lent to US consumers in 2016
                          • Figure 10: Mortgage lending national US aggregate data, 2016
                      • Market Factors

                        • Aging of the United States a factor in home ownership stats
                          • Figure 11: Population by generation, 2018 estimates
                        • Unemployment numbers stays consistent, jobs numbers increase
                          • Figure 12: Unemployment and underemployment, January 2017-December 2017
                        • Wage growth fastest since 2009
                          • Consumer sentiment dips, but remains high
                            • Figure 13: Consumer Sentiment Index, January 2016-December 2017
                          • Trump administration considering overhaul to CRA
                            • Tax reform reduces property tax deduction for certain states
                            • Key Players – What You Need to Know

                              • Mortgage rates continued to rise in 2017
                                • Quicken Loans becomes largest mortgage lender for Q4 2017
                                  • SoFi lays off 5% of its staff
                                    • Lenda looks to make mortgage process more efficient
                                    • What’s Happening?

                                      • Mortgage rates continued to rise in 2017
                                        • Figure 14: US average mortgage rates, January 2012-December 2017
                                      • Home ownership is financial priority for most
                                        • Figure 15: Home purchase as financial or personal priority, by generation, December 2017
                                      • Quicken Loans becomes largest mortgage lender for Q4 2017
                                      • What’s Struggling?

                                        • Wells Fargo loses bid to throw out predatory lending suit
                                          • SoFi lays off 5% of its staff
                                          • What’s Next?

                                            • FICO could lose monopoly on mortgage credit checks
                                              • Lenda looks to make mortgage process more efficient
                                              • The Consumer – What You Need to Know

                                                • Over half of US consumers own a house
                                                  • iGen, Millennials most likely to purchase a home in the near future
                                                    • Consumers are timely with payments, know their remaining loan amount
                                                      • Home owners think the mortgage process is too long, intimidating
                                                      • Home Ownership

                                                        • Majority of consumers own their living space
                                                          • Figure 16: Living space ownership vs rental, December 2017
                                                        • Over half of US consumers own a house
                                                          • Figure 17: Ownership versus rental, by type of property, December 2017
                                                        • Apartments are the most popular dwelling to rent
                                                          • Figure 18: Home, condo/apartment rentals, by age, December 2017
                                                        • Black and Hispanic consumers least likely to own property
                                                          • Figure 19: Home ownership vs rental, by ethnicity, December 2017
                                                      • Home Purchase Timing

                                                        • Most consumers have not purchased a home in the past five years
                                                          • Figure 20: Home purchase in past 5 years, by generation, December 2017
                                                          • Figure 21: Statement mailer from Discover, September 2017
                                                        • Consumers with household income above $50K have purchased most recently
                                                          • Figure 22: Home purchase in past 5 years, by household income, December 2017
                                                      • Intent to Purchase a Home

                                                        • Less than a third of consumers plan to purchase a home in next five years
                                                          • Figure 23: Intent to purchase home in next 5 years, December 2017
                                                        • Home purchase or ownership often dependent on life stage
                                                          • iGen, Millennials most likely to purchase a home in the near future
                                                            • Figure 24: Intent to purchase home in next 5 years, by generation, December 2017
                                                          • Hispanic consumers more likely to plan on home purchase
                                                            • Figure 25: Intent to purchase home in next 5 years, by Hispanic origin and Millennial status, December 2017
                                                        • What about Renters?

                                                          • Less than half of renters consider home ownership a primary goal
                                                            • Figure 26: Renter opinions on home ownership, December 2017
                                                          • Parents significantly diverge from non-parents
                                                            • Figure 27: Goals and opinions on renting vs owning, by parental status, December 2017
                                                        • Current Home Financing

                                                          • Mortgage is the most popular way to finance a home
                                                            • Figure 28: Current status of mortgage, December 2017
                                                          • Majority of young and middle-aged consumers still paying down mortgage
                                                            • Figure 29: Current status of mortgage, by age, December 2017
                                                            • Figure 30: State Farm mortgage loan direct mail, August 2017
                                                          • Few owners are using the equity available in their home
                                                            • Figure 31: Use of home equity, December 2017
                                                            • Figure 32: Bank of America HELOC direct mail, September 2017
                                                        • Searching for a Mortgage Lender

                                                          • Primary bank, broker, and referrals most useful for mortgage search
                                                            • Figure 33: Top 3 sources for finding current mortgage lender, December 2017
                                                          • Younger female consumers more likely to consult friends and family
                                                            • Figure 34: Finding current mortgage lender through personal recommendation, by gender and age, December 2017
                                                          • Digital ads not highly utilized
                                                            • Figure 35: Finding current mortgage lender, December 2017
                                                        • Financing Behaviors

                                                          • Consumers are timely with payments, know their remaining loan amount
                                                            • Figure 36: Mortgage payment behaviors, December 2017
                                                          • Most consumers aren’t monitoring interest rates
                                                            • Figure 37: Loan knowledge – Interest rates, December 2017
                                                          • Mobile not utilized as payment channel
                                                            • Figure 38: Loan knowledge – Interest rates, by generation, December 2017
                                                        • Following a Budget

                                                          • Four in ten home buyers make sure to follow a budget
                                                            • Figure 39: Following a budget, by household income, December 2017
                                                          • Most consumers do not begin home search before mortgage pre-approval
                                                            • Figure 40: Beginning the home search, December 2017
                                                        • Attitudes toward Home Financing

                                                          • Home ownership is financial priority for most
                                                            • Figure 41: Home purchase as financial or personal priority, by generation, December 2017
                                                          • Mortgage owners think buying a home is complicated
                                                            • Figure 42: Opinion on home buying or loan application process, December 2017
                                                          • Mobile applications welcome to a small number
                                                          • Attitudes toward Mortgages

                                                            • Home owners think the mortgage process is too long, intimidating
                                                              • Figure 43: Impressions of mortgage process, by age, December 2017
                                                              • Figure 44: Quicken Loans Rocket Mortgage acquisition email, February 2018
                                                            • Alternative lenders not at the front of home owners’ minds
                                                              • Figure 45: Interest in technology vendors as mortgage lender, by gender and age, December 2017
                                                            • Trust in the mortgage industry remains low
                                                              • Figure 46: Trust in mortgage industry, by household income, December 2017
                                                            • Reputation, lender support top mortgage lender features for consumers
                                                            • Appendix – Data Sources and Abbreviations

                                                              • Data sources
                                                                • Consumer survey data
                                                                  • Consumer qualitative research
                                                                    • Direct marketing creative
                                                                      • Abbreviations and terms
                                                                        • Abbreviations

                                                                        Home Financing - US - March 2018

                                                                        US $4,395.00 (Excl.Tax)