Lenders and Borrowers Differ on Priorities for Use of Mobile Technology

February 1, 2016 | By

Mobile activity is less common in the mortgage space than other consumer finance market segments, but the opportunity is promising, according to research by Fannie Mae’s Economic & Strategic Research (ESR) Group.

The ESR study found about one-fourth of surveyed lenders currently offer a mobile mortgage app, and approximately 40 percent of those who do not currently offer one plan to do so in the near future.

The reasons cited by lenders for not developing an app included the “high cost of IT investment, information security risks, compliance issues, and slow consumer adoption,” says Steve Deggendorf, a director of business strategy for ESR and author of the study.

Tracking Consumer Demand

A March 2015 report by the Board of Governors of the Federal Reserve notes that 87 percent of the adult population has a mobile phone, and 39 percent of Americans used mobile banking (defined as using a mobile phone to access an account, whether via mobile app, mobile website, or text message) during 2014. That percentage has risen steadily since 2011, when the annual survey was started.


But while borrowers — and potential borrowers — seem eager to use mobile devices for a range of business and financial transactions, their interests are different from where lenders seem to be focusing development efforts, notes ESR.

According to ESR research among recent homebuyers:

  • 12 percent have obtained a mortgage quote from their lender on a mobile device
  • 20 percent say they have compared mortgage quotes on their mobile device
  • 6 percent say they have filled out a mortgage application using a mobile device
  • 13 percent say they have used a mobile app to submit pay stubs or other documents to apply for a mortgage

However, 30 percent of polled recent homebuyers say that they would prefer using mobile devices to get a mortgage quote and more than one-third (35 percent) say they would like to use a mobile device to compare mortgage quotes. (Notably, obtaining a mortgage quote does not require the borrower to submit documents such as pay stubs or bank statements.)

ESR research also indicates that younger, more educated borrowers are more likely to use mobile devices to shop for a mortgage.

Lender Priorities

While consumers appear to prioritize using mobile devices to shop for a mortgage (e.g., obtain and compare quotes), lenders that currently provide mobile mortgage apps more highly value apps that will help borrowers get prequalified, connect with loan officers, or complete an application at their firm. (This function would be helpful for lenders because it would automate document intake process, and generate better data about their customers.)


Additionally, only 16 percent of lenders — about half the percentage of borrowers — list “facilitating mortgage quotes” as one of their top priorities for consumers and mobile mortgage apps.

Notes Deggendorf: “The lower priority that lenders are placing on mobile channels, and the differences in lender and consumer views on mobile tool functionality, could place lenders at risk of not meeting consumer demand or encouraging new entrants to address this growing demand at the expense of existing firms. Getting the right mix of traditional (person-to-person), online, and mobile channels and tools may be a key to future success.”

Information Security

For a majority of both homeowners and recent homebuyers — 52 and 54 percent, respectively — information security concerns top their list of issues for applying for and closing a mortgage online, whether via mobile app or desktop device.

Among recent homebuyers, the figure was even higher — 63 percent — for respondents without a college degree, says ESR.

Still, mobile mortgage apps are likely on the way to becoming a new, important tool for lenders in serving the needs of their younger customers — as long as those apps address the functions and information security they are truly seeking.


Adam Korengold is a research analyst with Fannie Mae’s marketing research and analytics team.

Estimates, forecasts and other views expressed in this article should not be construed as indicating Fannie Mae’s expected results, are based on a number of assumptions and may change without notice. How this information affects Fannie Mae will depend on many factors. Neither Fannie Mae nor its Economic & Strategic Research (ESR) Group guarantees that the information in this article is accurate, current or suitable for any particular purpose. Changes in the assumptions or underlying information could produce materially different results. The ESR Group’s views expressed in this article speak only as of the date indicated and do not necessarily represent the views of Fannie Mae or its management.




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