The US mortgage market has hit a trough, and new customer behaviors—such as embracing digital channels and nonbanks—have caused lenders to rethink their value proposition. But there are moves companies can make to stay competitive, note senior partner Daniel Stephens and coauthors. For example, just over half of borrowers today consider only a single institution in their search for a mortgage, with the average borrower contacting 1.7 institutions for information. Lenders could consider leveraging data and analytics to identify and engage with the broadest possible set of qualified prospective customers.
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Three area graphs show the number of institutions considered by respondents during the mortgage presale process at 3 different stages for the years 2018 and 2023. At each stage, more people considered fewer institutions in 2023 than in 2018. The share of respondents considering only 1 institution while contacting for information grew from 45% in 2018 to 52% in 2023. The share considering 1 institution while requesting prequalification or preapproval grew from 45% to 70%. The share considering 1 institution while submitting an application grew from 70% to 81%. The 3 bar graphs below show the average number of institutions considered during each stage dropping from 2018 to 2023.
Source: McKinsey mortgage survey of recent purchase borrowers, 2023 (n = 1,135); McKinsey retail banking customer experience survey, 2018 (n = 1,200).
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To read the article, see “Growth strategies for the purchase-mortgage market,” January 18, 2024.