HOME FINANCING-US-MARCH 2018

HOME FINANCING-US-MARCH 2018

Mar 2018 Mintel BankingN/A Price :
$ 4395

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.

Table of contents
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

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