Consumers don’t compare mortgages, CFPB report finds

Nearly half of consumers don’t compare rates and other factors when choosing a mortgage, according to a report from the Consumer Financial Protection Bureau. Informed consumers are more likely to do so, especially if they are familiar with available mortgage rates, the report found.

The report also found that three out of four consumers only apply for a mortgage with one lender or broker, most get their information from the lender or broker and that borrowers who prioritize the terms of the loan over other factors – such as the characteristics of the lender – are more likely to shop around.

Prompted by the findings, the bureau used the occasion to launch an interactive, online toolkit designed to help consumers as they shop for a mortgage. The toolkit is called called “Owning a Home” and is part of the CFPB’s “Know Before You Owe” initiative.

The online toolkit includes a rate checker aimed at giving consumers a clearer understanding of how much money is saved with lower rates, the effects of different down payments and credit scores, and information on how to get a better interest rate.

The bureau’s report is based on results from 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.

“Our study found that many consumers are not shopping for a mortgage. Consumers put great thought into the choice of a home, but the mortgage process continues to be intimidating,” said CFPB Director Richard Cordray. “Given the importance of this major purchase, almost nobody looks only at one house and decides to stop right there. Consumers spend considerable time looking at different neighborhoods and at different homes for sale. The same should be true of choosing among possible mortgage loans.”

“The Know Before You Owe Owning a Home toolkit makes it easy to see how shopping for a mortgage can translate into big dollars saved in the long run,” Cordray said. “It is designed to empower consumers with the information they need to make good decisions and talk to lenders with confidence. Consumers will be able to gain greater control over the outcomes of the mortgage process and maximize the benefits of this major transaction.”