Shopping the Internet for home mortgages is gaining wider acceptance, according experts at the National Secondary Market Conference of the Mortgage Bankers of America (MBA).
“It may take only one evening to check out 20 to 30 online lenders,” said Robert Habert, vice president of Strategic Alliances for MPACT Immedia, an electronic commerce firm in Toronto.
Speaking at an MBA seminar in Chicago, Habert examined the present and future of online loans.
He presented data from Killen Associates:
– 100 million adult Americans will have access to the Internet by year-end.
– The value of Internet transactions is expected to increase from $7 billion in 1997 to $327 billion in 2002.
– By 2005, 30 percent of people seeking mortgage loans will start looking for them on the net.
“Even if these projections are only half right, these are staggering numbers,” Habert said.
He added that online mortgage hunters are looking for speed, ease of access, security, up-to-date rates and a choice of lenders and products.
Another panelist in the seminar was Lee Decker, senior vice president of Monument Mortgage Inc. in Walnut Creek, Calif.
“Quick online mortgages are compelling to consumers,” he said. “The Internet is becoming the first place that people are looking. Internet mortgage information is something consumers expect today.”
He noted, though, that brand names have not yet emerged in the mortgage business:
“It’s all about price. There is no other differentiation that causes consumers to pick one mortgage company over another.”
Decker added that the online shopping experience breaks down the anxiety of home buyers prior to their face-to-face meeting with a lender: “People are feeling good about what they’re getting online, and the lender is getting a very motivated person.”
He added that consumers want to lock in rates online, though the applicant first must be evaluated for eligibility before a rate can be locked in. Also, the lender must receive cash upfront to cover the hedged costs of a rate lock.
In other developments at the MBA conference, Freddie Mac announced a new mortgage product that requires only a 3 percent down payment. Called Alt 97, it offers mortgages up to the conventional loan amount of $227,150.
Freddie Mac is a corporation chartered by Congress to create a continuous flow of funds to mortgage lenders.
The 3 percent down payment can come from a variety of sources, including gifts, unsecured loans or grants.
More than 680 lenders nationwide can offer Alt 97, using Freddie Mac’s Loan Prospector system.
“Alt 97 is ideal for borrowers with limited resources, including first-time and low- to moderate-income borrowers,” said Bob Ryan, Freddie Mac’s vice president of marketing and pricing.
In another announcement, the MBA forecast that Las Vegas will remain the nation’s hottest mortgage market for the third consecutive year.
Others in the top 10 are Dallas, Phoenix, Seattle, Houston, Atlanta, San Jose (Calif.), Orlando, Salt Lake City and Ft. Worth.
Chicago is projected to rank 57th, up from 60th, in the 1998 Hot Mortgage Market Index. Home mortgage purchase originations are expected to rise 5.5 percent in the Chicago area this year, with a total of $18.8 billion.
