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08/09/2022

Survey: Consumers Believe Time to Close Should Be Shorter

ProcessConsumers are placing great value on speed across the mortgage process, but especially during closing, according to a survey conducted by Arizent.

The survey showed three weeks is the upper limit of how long many consumers feel a mortgage transaction should take. Nearly three fourths said they think the process should take no more than 21 days from initiation of the application to closing, with 64% indicating one to three weeks is a sufficient amount of time, and 10% saying it should occur in even less time.

The survey group consisted of 503 respondents who took out a new purchase mortgage and 511 participants who refinanced an existing loan within the previous 12 months. The respondents were spread evenly across baby boomers, Generation X and millennials.

The type of mortgage made little difference, with an equal share (64%) of purchase and refinance customers agreeing transactions should close within a three-week window. According to the survey, consumers going through the mortgage process for the first time with their particular type of transaction are even more likely to believe it should proceed more rapidly than those who had obtained a mortgage previously.

These expectations deviated from reality. According to ICE Mortgage Technology, the average time to close a purchase was 51 days, while it took 49 days to close a refinance.

Overall, 49% of borrowers said faster closings would have resulted in a better experience for them, far outpacing other factors, such as paperless transactions at 29% and enhanced technological efficiencies at 21%.

SpeedThe Arizent survey showed that the younger the consumer, the more likely they are to expect to close in three weeks or less. Only 52% of Generation X respondents were satisfied with the amount of time their transactions took to close. This is a possible reflection of those age groups growing up accustomed to a digital world where business decisions come quickly and orders are frequently turned around with just a few taps. On the flip side, 64% of baby boomers said they are very satisfied with the amount of time their transactions took to close.

Much of the time involved in mortgage processing is baked into the process of a complicated, highly regulated transaction, with delays sometimes inevitable to ensure that all parties comprehend the detail of the transaction, according to Woody Fowles, vice president, operations services at Mphasis Digital Risk, a technology-based originations and compliance solutions provider.

The industry could increase satisfaction surrounding closing times by keeping customers better informed about the intricacies involved.

“There’s a lot of scrutiny that’s around that to make sure the customers understand what they’re signing,” Fowles said. “You have to educate the first-time homebuyer a little bit. Part of their frustration is they don’t understand the regulations around what to do.”

For the most part, consumers are embracing mortgage technology at all stages of the loan process and are looking to streamline transmission of information sent to lenders if it results in faster closings. They also are willing to share and grant electronic access to personal identifiable information, despite the cyber risks.

“The lender of the future has to be nimble, has to automate, has to be able to anticipate,” said Matthew Moosaroparambil, director of banking, insurance and capital markets at management consulting firm Guidehouse.

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