The research firm, whose results are often touted in marketing efforts, showed that overall, most borrowers remain satisfied with the service from their lenders despite the apparent burst of the housing bubble and sub-prime mortgage foreclosures. The study, which measured satisfaction over four factors of the mortgage experience, found that overall satisfaction was 750 on a 1,000-point scale, which is about equal to a similar study conducted last year.
"What we thought was going to happen was that the satisfaction rate would go down because [we thought] people were going to have a harder time getting a loan," Tim Ryan, senior director of the mortgage practice at J.D. Power and Associates and author of the study, tells Marketing Daily. Satisfaction remained level because many borrowers were shying away from brokers and dealing directly with lenders, which speeds mortgage approval and closing times, he says.
Ryan adds that with so many sub-prime borrowers defaulting on their loans, mortgages for mid-range borrowers were also approved more quickly, which also increased customer satisfaction.
On the 1,000-point scale, Wachovia scored 827, and SunTrust scored 818. The next-closest score was from Bank of America--which was 760, a 50-point difference. "Those two companies really commit to customer satisfaction and do what they can to make sure they do that well," Ryan says. "There's a lot of moving parts [to a mortgage] and to get it right takes a lot of work."
"We are proud to be setting a new standard in customer service for the mortgage industry," said Becky DeGeorge, customer experience leader for Wachovia Mortgage and Retail Credit, in a statement. "Our consistent leadership in customer satisfaction shows we have a model that works across all business lines. That's a great foundation for winning the loyalty of existing customers and attracting new customers in a challenging environment."
Factors that affect a customer service ratings include providing an accurate time frame for approval, providing updates on the process, and providing accurate application and closing cost estimates. The survey, which was conducted from September 2006 to August 2007, showed that customers who received an approval time frame gave scores that were an average 112 points higher than those who did not get such information. Similarly, customers who received updates on their loan status provided scores that were an average 209 points higher.
On the downside, customers whose monthly payments were higher than estimated gave scores that were 159 points lower than borrowers who received accurate estimates. Also, borrowers who were surprised with additional fees during closing gave scores that were 220 points lower, according to the study.
Moving forward, Ryan expects customer satisfaction to increase over the next year, as fewer borrowers go through brokers to refinance, though diminishing property values could hurt the customer satisfaction index.