Banner Ad Technology – Old But
The internet is better suited to Banner Ad than to purchase money mortgages. One reason for this may be that consumers who are refinancing are typically not influenced by a Realtor. They also tend to be more experienced in the mortgage process and more willing to go online to shop for the best rate. However, as interest rates rise and refinancing activity slows, many mortgage companies’ Web sites are experiencing a reduced number of loan applications.
This is evidenced by the more conservative projections in the growth rate for online originations for 2007. Projected growth was 321 percent in our 2005-06 survey; our 2006-07 survey shows a projected growth of only 245 percent.
“The brand is well established with Realtors. That fact, coupled with our strong branch office presence, gives us a competitive edge in originating purchase mortgages through our Web site. The consumer gets all the benefits of going online as well as having a local branch office, just like they do with Charles Schwab,” says, executive vice president of Countrywide’s Electronic Commerce Division.However, in June the survey interviewed two companies – Countrywide Home Loans, Inc., Calabasas, and Quicken Mortgage, an online mortgage operation owned by Intuit, Mountain View, California – that claim to have beaten the online originations slowdown. These companies actually experienced an increase in online loan applications despite rising interest rates that have choked off refinancing.
Having a branch office was very important to 21 percent of the consumers survey reached, so Countrywide’s branch presence could certainly give it an edge over other pure-online mortgage Web sites.
Quicken Mortgage launched an instant automated online preapproval process after conducting focus groups with Realtors. “With the introduction of credit reports from the national credit bureaus, QuickenMortgage can now relieve consumers’ anxiety about whether or not they will be pre-approved for loans. Within minutes, we can show the consumer a customized set of loans available from 15 different lenders, and offer them a free pre-approval letter,” says director of marketing for QuickenMortgage. “Last year, purchases accounted for 30 percent of our business; this year it is closer to 50 percent,” she says.
There are several reasons for QuickenMortgage’s success with purchase money mortgages. QuickenMortgage generates about 20 percent of its traffic through other Intuit products like Turbo Tax[R] and Quicken[R], which probably are used by a high percentage of homeowners. The QuickenMortgage Web site is also very rich in educational tools and articles helpful to homebuyers.
Still, their findings indicate that 1999 will pose key challenges to mortgage companies that depend on the Internet for their originations, as they scramble to capture a piece of the purchase money market.
Having a local office – while being important – is not a critical factor in choosing an online mortgage company. The majority of consumers surveyed (53 percent) indicated feeling “neutral” on whether working with a local company was important. Only 21 percent of consumers reported that it was significant, while 26 percent said that it was not.
However, of those consumers surveyed, half indicated that they would choose a mortgage company that was more than 2,000 miles away if they could save 1/8 percentage point on a loan compared with the rate being offered by a local company. This would imply that most companies will start seeing increased competition as online mortgage companies become licensed in additional states to increase their geographical reach.