Referral power: Survey reveals lack of shopping for mortgages

About one-third of recent homebuyers failed to shop around for a mortgage, saying they were satisfied with the first quote that a lender gave them, according to Fannie Mae’s National Housing Survey.

Researchers found that higher-income and younger-aged borrowers were the most likely to gather multiple quotes when shopping for a mortgage.

On the other hand, “first-time homebuyers and lower-income borrowers are more likely to say that referrals from friends, family, or co-workers had a major influence on their choice of lender,” noted Sarah Shahdad and Qiang Cai of Fannie Mae’s Economic & Strategic Research Group. “Only first-time homebuyers are more likely to say that a real estate agent’s or mortgage specialist’s referral influenced their choice of lender. … These findings suggest that there is an opportunity to help consumers be better informed and improve upon the mortgage shopping process.”

Shahdad and Cai urge that consumers be provided with more information about mortgage product choices and that buyers be encouraged to seek multiple sources of information.

“As large and infrequent as the mortgage transaction is in most people’s financial lives, borrowers may be leaving money on the table by not shopping around and negotiating for the best terms they can get,” Shahdad and Cai wrote. “Getting a better deal can help borrowers sustain their mortgage even in the case of unexpected increases in expenses or decreases in income.”