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INSPIRED TO HELP YOU SUCCEED www.carlisleandgallagher.com @InspiredByCG
1 in 3 Would Consider a Walmart Mortgage80% of U.S. Consumers Would Consider a Non-bank Mortgage
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED2
Introduction
Homeowner confidence is high –
half of U.S. homeowners expect their home to grow and deliver significant value
One-third of consumers would consider a mortgage from Walmart
There are distinct profiles of mortgage buyers
Primary banks are missing 31% of share with captive customers
Key Questions
1. What is the current view toward home ownership?
2. How have recent changes in themortgage industry impacted the application experience?
3. What factors are most important in the mortgage process?
4. Would customers be willing to consider a non-bank for their next mortgage?
5. What do primary banks need to do to add market share?
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED3
Survey Snapshot
Even distribution of respondents across age segments
52% of respondents have purchased a new house or refinanced their home since 2010
Age DistributionHousehold Income
Last Applied for Mortgage
METHODOLOGY
• 618 survey responses
• All respondents live in the U.S.
• The survey was conducted online
• Participants were recruited from an online research panel
• There were no specific requirements to be on the panel
• Participants were required to be over 18 years of age
• The study targeted 50% of respondents to have household income over $100K and no more than 25% below $50K
13%
38%46%
3%Less than $49,999
$50,000 to $99,999
$100,000 to $249,999
$250,000 or more
32%
35%
33%
18-34
35-50
Over 50
2012
2010-2011
Before 2010
28%
48%
24%
Overall mix of respondents reflects a higher income base
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED4
Home Ownership Confidence is High
46% of respondents expect their home values to grow significantly over time
Only 4% expect housing values to decline over time.
Only 40% of respondents over 50 expect home values to grow significantly
The 35-50 age category are the most optimistic
6% 4%
44% 46%
Grow significantly over time
Flat growth and maintain value
Decline over time
Don’t know
Expected Financial Return on Home
Q12: Which of the following best describes your expected financial return on your home?
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED5
Home Ownership is Still an Important Investment
TAKE AWAYHomeowner appeal remains strong
This trend is most significant for family incomes below $100K
4%
43% 53%
A key component, but not most
important investment
Decline over time
View of Home Ownership
Most important investment
Q12B: Which of the following best describes your view of home ownership?
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED6
The Pipeline for Home Buying is Shifting Towards Home Purchases
Mortgage originations are forecasted to contract in 2013
– Refinance volume will decrease from 68% of total originations to just 40%
– Purchase volume is forecasted to increase
– Overall, total originations is forecasted to decrease
($B) 2011 2012 2013 2011-2013 CAGR
Total Originations 1262 1466 1043 -9.1%
Purchase 404 406 631 25.0%
Refinance 858 1060 412 -30.7%
Refinance % Share 68% 72% 40%
Source: MBA Mortgage Finance, September 18, 2012
Expect to buy a new home in the next 10 years
TAKE AWAYAn efficient purchase process will be critical in order to be competitive, including refocusing key resources back to fulfillment.
According to CG’s survey, in the next ten years:
– 57% of homeowners between the ages of 18 and 34 plan to buy a new home
– Only 25% of homeowners over 50 plan to purchase a new home
More than 3 years
1-3 years
Within the next 12 months
44%
40%
16%
Q11: When do you expect to purchase a new home?
Timing for Families Who Plan to Buy A Home
37%Expect to buy a new home in the next 10 years
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED7
Primary Banks Remain in a Strong Position Overall with Their Customers
Respondents have a strong satisfaction levels with their primary bank
The majority believe that they are preferred customers
25% of respondents look to a specific person at the bank for guidance and assistance
Technology, security, and location rank at the top of the list
Customer service and cost rank lower 81%
14%
4%
High Moderate
Low
Satisfaction with Primary Bank
TAKE AWAYOverall satisfaction and priorities suggest that primary banks are in a strong position to hold a large share of mortgages with their clients
Q39: What is your degree of satisfaction with you primary bank? (High= 4 or 5, Moderate=3, Low = 1or 2.
RESPONSE MEAN
Technology for online banking 4.24
Security of my assets 4.20
Location 4.18
Customer service 4.03
Brand 3.95
Cost 3.88
Products and services 3.82
Satisfaction with Primary Bank Features
Q34: For your primary bank, please rate your level of satisfaction with each of the following (1- no satisfaction at all, 5- highest satisfaction
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED8
Education
Range of product
Simplicity of product
Communication of application status
Simplicity of completing application
Understand application process
Time-to-close
Treated as a unique customer
Trust in mortgage advisor/salesperson
Trust in financial institution
Low cost
11%
15%
19%
34%
42%
43%
46%
15%
42%
46%
84%
Selection Criteria is Complicated
Q39: Which of the following factors are most important in the mortgage application process? Choose up to five.
TAKE AWAYDespite the importance of cost, there are many factors that influence the mortgage selection process
#1 Factors in the Mortgage Application Process
Most Important Factors in the Mortgage Selection & Application Process
61%23%
16% Cost
Trust
Customer Service
Cost
Trust
CustomerService
INSPIRED TO HELP YOU SUCCEED © 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. 9
Customer Service Rises to be a Painful Aspect of the Mortgage Application Process
No credit counseling
Limited product options
Complexity of products
Difficulting completing application requirements
Unable to track application status
Difficult to communicate with
Slow execution
Not treated as unique customer
Lack of trust in institution
4%
12%
27%
28%
31%
32%
56%
11%
21%
26%
66%High cost
Q41: Which of the following factors are considered to be the most painful aspects in the mortgage application process? Choose up to five.
Untrustworthy advice
Untrustworthy advice rises to the top in the trust segmentWhile the speed of execution remains the top service concern, lack of communication rises to be #2 issueIn terms of top pain area, service increases from 16% as a top area of importance to 35% as the most painful aspect of
the mortgage application process
Most Important Painful Factors in the Mortgage Application Process
Cost
Trust
Difficult to communicate with
CustomerService 77% of
respondents believe that regulatory changes will have a worse or no impact on the mortgage process
INSPIRED TO HELP YOU SUCCEED © 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. 10
Primary Banks are Missing their Fair Share of the Mortgage Market
TAKE AWAYDespite strengths in areas such as checking and credit cards, a large share of customers look to alternatives for their mortgage needs
39%
31%
30%
Mortgage Segments for Primary Banks
Q53: Would you prefer to have you mortgage with one of your major banks?
Current Mortgage Customers
Unattainable
Missed Opportunity
39% of respondents have a mortgage with their primary bank
This represents significant opportunities for banks to gain market share with their current customer base
70% of
respondents would prefer to have their mortgage with one of their main banks
© 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. INSPIRED TO HELP YOU SUCCEED11
Consumers Placing Trust in Non-Banks
80%
20%
YesNo 1 in 3 consumers would consider a
mortgage from Walmart
Nearly half (48%) of consumers would consider a mortgage from PayPal
80% of Survey Respondents Consider Non-bank Mortgages
TAKE AWAYInstitutions looking to gain market share must target
customer values instead of traditional asset segmentation.
INSPIRED TO HELP YOU SUCCEED © 2012 Carlisle & Gallagher Consulting Group. Proprietary and Confidential. 12
Summary: Banks Must Align to Customer Values to Win Mortgage Market Share
Here are three strategies to gain share in the new normal:
1. Leverage the Investment in Regulatory Response to Address the Voice of the Customer
2. Focus on Cost, Trust and Service as Defined by Customer Value to Match Your Target Market
3. Capitalize on Market Share Opportunities for Primary Banking Customers
H
Study Finds One-third of Consumers Would Consider a Mortgage from Walmart
Tom Mataconis | VP of Consulting Doug Hautop | Lending Practice Leader
[email protected] [email protected]
704.936.1610 704.936.1600
Carlisle & Gallagher Consulting Group
212 South Tryon Street, Suite 800, Charlotte, NC 28281
www.carlisleandgallagher.com