Search Tools in the House: Online Mortgage Shopping
Consumers who applied online for home loans were more likely to have used search and product selector tools than prospects that didn't apply, according to a new study from Forrester Research and Compete. The study, "Online Mortgage Shoppers' Paths To Purchase: Navigational And Survey Data Uncovers How Prospects Use Sites," looks at historical data from Compete's panelists to determine how they used the Web to search, research, and apply for mortgage loans.
The study examined the best determinants of actual conversion (prospect to applicant) on a total of 12 financial institution and aggregator sites. The sites that drew the most prospects didn't always have the most applicants, according to Brad Strothkamp, senior analyst at Forrester Research. "The ones that did the best job in converting prospects were those that provided the right types of tools."
The best tools for sites to provide, according to Strothkamp, are payment calculators and software applications that enable an applicant to determine what type of loan is "best" for him.
Much less useful, interestingly enough, was informational content, Strothkamp says. Mortgage shoppers tend to go to portals such as Yahoo! Finance to get information regarding mortgage basics like types of loans, the home buying process, etc.
"That tells us that financial institutions would be better served by spending their money on the tools needed to convert prospects after they've educated themselves elsewhere and then come to the site," Strothkamp says.
"We found that in an average month, 9.4 million consumers are shopping across the studied sites," adds 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 they 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."
"Lenders looking to attract and convert more lending prospects should evaluate how they use search," Strothkamp says, because they offer easy access to rates and fees, and provide selection tools for choosing the right mortgage."
Additional findings from the study:
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.
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.
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