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CHERRY HILL, N.J. – March 10, 2015 – Home buying confidence has improved over the last year, according to TD Bank’s third annual Mortgage Service Index. The survey finds that 30 percent of Americans consider now to be a very good time to purchase a home, compared with just 20 percent in 2014; 29 percent of consumers are likely to purchase a home this year, compared with 21 percent in 2014.
The Mortgage Service Index, a national survey of more than 1,450 consumers who purchased a home within the last 10 years, examines consumers’ buying experiences and mortgage behaviors.
While the number of consumers who purchased homes within the past two years increased by five percent since 2014, Americans still face obstacles. According to the Index, two in five consumers believe there is a lack of inventory in their price range, and 44 percent aren’t familiar with home affordability programs.
“The Mortgage Service Index found that only 28 percent of consumers are successfully using mortgage affordability programs, which demonstrates that a significant number of potential buyers may be missing the opportunity to purchase a home,” says Malcolm Hollensteiner, director of retail lending sales and production, TD Bank. “Lenders today should be working with borrowers on a case-by-case basis in order to find the loan option that best meets their needs and budget.”
Mortgage Service Index findings
• Most buyers (86 percent) felt they had sufficient resources to educate themselves about the process, but 51 percent think banks could offer more relevant, helpful information online; 49 percent said loan officers should explain options more clearly.
• First-time buyers expressed a particularly strong desire for better educational resources – 52 percent felt banks could offer additional home financing seminars and workshops (compared with 40 percent of all respondents) and 58 percent said they looked for additional information online (51 percent of all respondents).
• Buyers still seek home financing information through one-on-one meetings with Realtors and lenders (45 percent). At the same time, digital resource use is on the rise, particularly among younger homebuyers.
For example, millennial buyers said they obtained information from: bank websites (56 percent vs. 43 percent nationally); comparison/expert websites (35 percent vs. 23 percent nationally); social media (22 percent vs. 10 percent nationally)
• Half of millennials said they are either very or extremely likely to purchase a home within the next year, supporting the prediction that this generation will drive the housing market in 2015. Additionally, more than one-third of millennials consider now a very good time to purchase a new home. The data aligns with recent findings from TD Bank’s Fiscal Fit survey on financial goals, which shows that millennials are more aggressively making and meeting financial goals compared with older generations.
However, millennials continue to face more barriers to homeownership than the national average. A number of factors more negatively affected millennials’ home purchasing decisions, including: lack of knowledge and confidence navigating the process (32 percent vs. 20 percent nationally); mortgage rates (27 percent vs. 18 percent nationally); and non-mortgage debt (25 percent vs. 15 percent nationally)
Despite this, the majority of millennials (64 percent) ranked their experience getting approved for a mortgage as excellent or very good.
• Overall home buying experiences have improved over the last year: 68 percent of respondents said their most recent experience was excellent or very good, compared with 62 percent in 2014. The numbers were higher among first-time homebuyers (69 percent) and buyers who purchased a newly constructed home (81 percent).
Consistent with last year’s Index, more than half of respondents said they had excellent or very good experiences with the following aspects of buying a home: finding a good realtor (59 percent); finding the right lender (57 percent); getting approved for a mortgage (65 percent); and length of the entire process (52 percent)
• One aspect saw a slight decrease in satisfaction this year – finding a home (54 percent compared with 57 percent last year), which aligns to survey findings on lack of inventory.
© 2015 Florida Realtors®