Almost half of consumers do not shop around for a mortgage when purchasing a home, a new report released Tuesday by the Consumer Financial Protection Bureau (CFPB) finds.
The CFPB announced the report in conjunction with information about its new online toolkit, “Owning a Home,” designed to help consumers as they shop for a mortgage.
The report is based on results from new data in the National Survey of Mortgage Borrowers, a voluntary survey jointly conducted by the CFPB and the Federal Housing Finance Agency. The bureau analyzed responses from consumers who took out a mortgage to buy a home in 2013.
Three out of four consumers apply only with one lender or broker, the study finds, noting that while half of consumers shop around to see who advertises lower rates, fewer than one out of four borrowers actually end up submitting a loan application to more than one lender or broker.
“Our study found that many consumers are not shopping for a mortgage,” said CFPB Director Richard Cordray, in a statement. “Consumers put great thought into the choice of a home, but the mortgage process continues to be intimidating.”
Most consumers also get their information from lenders or brokers, who have a stake in the outcome.
Seventy percent of consumers report relying on their lender or mortgage broker “a lot” to get information about mortgages.
“While lenders and brokers can be valuable resources, they have a stake in the selling of the mortgage, so what is best for the lender or broker is not always best for the consumer,” the report notes.
However, consumers who are confident about their knowledge of available interest rates are almost twice as likely to shop around as consumers who are unfamiliar with available interest rates.
Fifty-five percent of shoppers said they were very familiar with mortgage rates, while 30% of shoppers said they were not at all familiar, according to survey results.
The bureau released Owning a Home, a suite of tools meant to inform consumers shopping for a mortgage, as part of its Know Before You Owe initiative.
One key feature of the Owning a Home toolkit is its rate checker tool, the CFPB says, adding that the tool “helps consumers understand what interest rates may be available to them by using the same underwriting variables that lenders use on their internal rate sheets.”
Written by Cassandra Dowell