Jupiter Research is backing off its growth projections for online mortgages published in 2003, mostly thanks to customer fear of providing personal information online. Mortgages that originate online are expected to increase to $74 billion in 2009, accounting for five percent of all purchase mortgages. Jupiter expects that eight percent of all refinance mortgages, totaling $78 billion, will also originate online in 2009.
Those considering applying for a mortgage online are likely to be put off by spam emails that push online mortgage features that sound like theyre too good to be true. This category of spam is reportedly the second largest category of unsolicited email (after "health and body-related spam"), which doesnt help the industry expand.
Consumers say they apply online to save time, and with their application come high expectations. 48 percent of users who have researched or applied for a loan online consider six hours or less to be an acceptable amount of time to wait for a response to an online loan application, while 45 percent think waiting 12 hours to two days is acceptable. Fewer than three percent of respondents thought that waiting more than two days for a response is acceptable.
Jupiter Research has reduced its forecast of the share of originations taking place online relative to its 2003 forecast. The updated forecast model more stringently defines an online application, based on a belief that the quality of online mortgage applications is not rising as much as previously expected.
The forecast reduction was released in spite of the improvement of online tools and processes. These tools and processes make it increasingly easy to submit mortgage applications online.
In a recent Jupiter Research consumer survey, nearly 10 percent of all online users said they had applied for a loan or mortgage online, while over 13 percent of new users (online for less than a year) said they had done so. These figures include those who may not necessarily be qualified or are serious about following through on the mortgage application.
New online users may be more inclined to apply online for a mortgage for the novelty of it. The newbies are less comfortable providing sensitive personal information online than are more experienced users, however, which dilutes the quality of the mortgage application pool. Credit card issuers also report to Keynote that the quality of online credit card applications is typically below that of off-line applications.
At the same time, the number of households that indicate they have applied for a mortgage this year did not grow as much as expected over last year, primarily due to limited efforts on the part of large lenders to migrate consumers online. Projections for the online share of purchase and refinance mortgage originations, while indicating strong growth, are somewhat lower than in the 2003 forecast.
Jupiter recommends that lenders emphasize the convenience of the online process, rather than solely emphasizing lower rates or easier approval, to motivate consumers to apply online.
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