Despite Mortgage Meltdown, Today's Borrowers Continue to Spend Twice as Much Time Researching a Car Purchase as Researching Their Home Loan
New Zillow® Mortgage Marketplace Survey Shows Borrowers Shopping around Less Than Two Years Ago;
One-third Spent Less Than Two Hours Researching and Shopping for Home Financing Options
SEATTLE, April 29 /PRNewswire/ -- The impact of the widely publicized mortgage meltdown appears to have caused little change in borrower behavior during the past two years, according to a new Zillow Mortgage Marketplace survey(i) of 2,729 adults conducted on its behalf in April by Harris Interactive®. Borrowers report they are spending no more time researching a home loan today than they did in 2008 and those who obtained a loan in the past five years are soliciting fewer quotes -- an average of three quotes versus four in 2008.
A home purchase is one of the largest investments most people will make in a lifetime, yet borrowers who obtained a home loan in the past five years typically spent just five hours researching their options, which is unchanged from March 2008. Nearly one-third (31 percent) spent two hours or less. This is on par with the typical time spent researching a vacation or computer purchase, and half the time consumers typically allocate to research a car purchase yet these items cost just a small fraction of the average cost of a home. For example, the average home loan costs five times more than the average car and 80 times more than the average vacation as outlined in the table below.
"The last few years should have driven home the lesson that understanding one's home loan is critically important, but mortgages continue to be something that most people don't want to spend time thinking about," said Zillow Chief Economist Dr. Stan Humphries. "Not understanding a home loan can have catastrophic consequences. Starting from our first survey two years ago, I've been surprised that people spend more time shopping for cars and televisions than they do researching mortgages. I'm further surprised that they spend no more time shopping for mortgages now than they did two years ago, even in the midst of an unprecedented foreclosure crisis. People spend countless hours shopping for the perfect home, yet few realize that small differences in the interest rate or discount points can add tens of thousands of dollars to the overall cost of the home. In an area like mortgages, where the lender has so much more information that the typical borrower, getting multiple offers from lenders and being able to compare them relative to one another is critical to leveling the playing field."
In fact, borrowers who shop around and get a number of mortgage quotes can save thousands over the life of the loan -- even half of a percentage point in loan rate can save the buyer of a $300,000 home more than $26,000. On a $500,000 home, the savings can be more than $44,000(ix). Even over a shorter period of time, the savings from a half of a percentage point can be substantial: in five years, the buyer of a $300,000 home can save nearly $4,500 and the owner of the $500,000 home could save closer to $7,500.
In the past five years, 16 percent of U.S. adults report they have obtained or refinanced a home loan and two-thirds (65 percent) of those admit they want to do things differently when shopping for their next home loan. Of the borrowers who want to do things differently:
Low Mortgage Rates Make it an Attractive Time to Buy or Refinance a Home
According to the latest Zillow Mortgage Rate Ticker, national mortgage rates remain historically low at 4.84 percent for a 30-year fixed loan, making it a great time to consider a home loan. In Zillow Mortgage Marketplace, borrowers are able to shop for a loan anonymously, while getting personalized loan quotes from pre-approved lenders, who have been rated by other borrowers. All quotes received are provided in a standardized format that makes it easy to clearly identify fees and compare multiple quotes. Borrowers receive an average of 11 custom quotes per request.
About Zillow Mortgage Marketplace
Zillow Mortgage Marketplace is a free, open, and transparent lending marketplace, where borrowers connect with lenders to find loans and get the best mortgage rates. Borrowers anonymously submit loan requests and receive an unlimited number of custom mortgage quotes with real rates directly from thousands of competing lenders. Zillow Mortgage Marketplace also provides mortgage calculators, mortgage advice, mortgage widgets, and lender directories. Zillow Mortgage Marketplace is a business of leading real estate site Zillow.com®, and can be found by visiting www.zillow.com/mortgage.
About Harris Interactive
Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology, and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American, European, and Asian offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us – and our clients – stay ahead of what's next. For more information, please visit www.harrisinteractive.com.
Zillow.com and Zillow are registered trademarks of Zillow, Inc. Harris Interactive is a registered trademark of Harris Interactive Inc.
(i) This survey was conducted online within the United States by Harris Interactive on behalf of Zillow from April 12-14, 2010 among 2,729 adults ages 18 and older. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated. For complete survey methodology, including weighting variables, please email firstname.lastname@example.org.
(ii) AAA 2008 Vacation Costs Survey. Average cost per day is $244 for a family of two adults.
(iii) The median value of all homes in the U.S. according to the Zillow Home Value Index, minus 20% (assuming a down payment).
(iv) Auto Affordability Index compiled by Comerica Bank for Q4 2009.
(v) The median value of all homes in the U.S., according to the Zillow Home Value Index.
(vi) Based on averages from Remodeling Magazine 2009-2010.
(vii) NPD Costs for MacBook Pro
(ix) Calculations were made assuming 30-year fixed mortgages, 20% down on each home, and comparing mortgage rates of 5% versus 5.5%. Total savings over the life of a loan for a $300,000 home was $26,640, and total savings on a $500,000 home over the life of the loan was $44,640.