Study Reveals Consumers Who Use Online Tools More Likely to Apply for Mortgages

Compete and Forrester Research findings detail key role search plays in path to purchase
Compete and Forrester Research findings detail key role search plays in path to purchase

RISMEDIA, June 14, 2006?A new study from Compete and Forrester Research (Nasdaq: FORR) reveals that consumers who applied online for home loans were more likely to have used search and product selector tools than prospects who didn’t apply.

Nearly one in five applicants used search, compared with only 7 percent of prospects. Compete and Forrester Research partnered on the study, titled “Online Mortgage Shoppers’ Paths To Purchase: Navigational And Survey Data Uncovers How Prospects Use Sites,” which assesses how consumers use the Web to search, research, and apply for mortgage loans.

“We found that in an average month, 9.4 million consumers are shopping across the studied sites,” said Mike Bailey, managing director of Compete’s financial services practice. “Consumers see the Internet as a key channel for research and education. There are more than 1 million consumers who research online and apply online or offline, and represent $450 million in business opportunity each month. In order to take advantage of this trend, mortgage sites must seek ways to make it easier to apply online.”

Additional key findings from the study include the following:

– Aggregators blow away traditional lenders when it comes to attracting prospects to their site. Aggregators receive 72 percent of all prospect visits, with at least 6 million monthly visitors. In contrast, traditional lenders receive 19 percent of visits, and online lenders account for the remaining 9 percent of prospects.

– Consumers said that the most important element when choosing a lender is information on rates and fees. More than three-fourths of researchers went online for rate information — at least twice as many as for any other piece of information.

– Many applicants go offline to apply via the phone or in person; however, 37 percent of applicants apply online or submit a lead form via the Internet. Aggregators receive 75 percent of the applications submitted online each month.

– As the largest segment, Boomers comprise more than 40 percent of prospects and applicants. Although Seniors make up 16 percent of all prospects, they comprise only 10 percent of applicants.

“Lenders looking to attract and convert more lending prospects should evaluate how they use search, offer easy access to rates and fees, and provide selection tools for choosing the right mortgage,” said Brad Strothkamp, senior analyst at Forrester Research.

This study observed navigational behavior from Compete’s panel of more than 2 million consumers as well as insights and attitudes from 283 consumers who recently conducted research online and then applied for a home mortgage.

Compete presented the full findings at a Web seminar providing best practices in driving online mortgage applications. For a replay of the event, go to www.vcall.com/replay and enter replay number 1448134905.