ICE Mortgage Technology’s 2023 Borrower Insights Survey indicates caution to buy and sell, but lender opportunities remain

PLEASANTON, Calif. – May 5, 2023 – ICE Mortgage Technology^®, part of Intercontinental Exchange, Inc. (NYSE: ICE), a leading global provider of data, technology and market infrastructure, is pleased to announce the results of the 2023 Borrower Insights Survey. The survey describes a 2022 landscape that was difficult to navigate for borrowers, renters, and lenders alike, due to high interest rates and the prospect of a recession. As a result, 2022 was a year of extreme volatility in the home lending market. And, by all indications, 2023 may bring more of the same.

Easy does it: 2023 borrower trends

The survey results pointed to a slow market, marked by caution. Among the notable findings:

• Over a third of current borrowers (36%) reported that they planned to remain in their current homes and another sixteen percent were unsure if they will seek new housing.
• Of those definitely remaining in their homes, one-third (36%) specifically cited high interest rates as the reason for staying put.
• Nearly two-thirds (63%) of recent borrowers planned to seek new financing, with many citing home equity loans or reverse mortgages, as well as refinancing and investment property loans.
• Over one-third of current renters in our sample are former homeowners (34%).
• Seventy-three percent of renters believed that owning a home is beyond their reach at this time.
• Fifty-six percent of current renters said they would be more likely to purchase a home if there was a program that addressed high home prices, and fifty-four percent said they would be more likely to buy if there was a program that addressed high interest rates.

These statistics indicate that staying put for the time being is a priority for many homeowners, as they watch and wait amidst fluctuating interest rates and market conditions. That said, many of those same homeowners seem to be open to new financing options, if they can find something that meets their financial goals. There also appears to be an opportunity to reach more renters with creative purchasing options. As a result, deepening existing borrower relationships and building new ones remains essential.

So, what are today’s borrowers and potential borrowers looking for? The survey indicates the following:

• Flexibility: When it comes to financing a mortgage, more than half (53%) cited flexible loan options among their most important considerations.
• Savings: Two-thirds (67%) said saving money was one of their top three concerns for financing a mortgage; more than half cited low lender fees (56%).
• Education and guidance: Renters continue to think that owning a home is more difficult than it is. Half believed it’s necessary to provide more than a ten percent down payment (53%).
• High tech and high touch: Fewer than one in ten borrowers wanted a fully digital experience (9%), although many welcomed the convenience of digital processes and services.
• Different kinds of outreach based on different experiences: Experienced borrowers (those who have taken out five or more mortgages in their lifetime) favored digital offerings. Those who bought when interest rates were low (one to two years ago) indicated being most likely to be cautious about selling their home.
• Trusted referrals: Borrowers, especially the least experienced, relied on referrals to choose lenders, turning to their realtors, family, or friends.

Know your borrowers, and help guide their future

The survey paints the picture of a somewhat stalled market, though how severely and for how long it remains that way is unclear. Borrower preferences continue to be influenced by recent experiences with interest rate volatility, home prices, and the pandemic. Lenders are encouraged to tap into their knowledge of their borrowers and their local marketplace to inform their strategies. The following steps can make a huge difference:

• Invest in your online offering. Even the oldest and least tech-savvy borrowers want and expect the convenience of digital portals and processes to be part of your service portfolio.

• Digitize your back office. Your technology investment should not be confined to customer-facing offerings. Smart back-office automation will free you and your people for the all-important task of maintaining relationships.
• Invest in relationships with realtors. Borrowers are reliant on referrals from realtors, friends, and family. Developing and maintaining relationships is essential – the quality of your referral network could be the margin of difference. Remember that “high tech, high touch” is what nearly all borrowers expect and want.
• Know your borrower. Understanding borrowers’ preferences by age and experience will enable you to “meet them where they are.”
• Stay in touch. Ongoing relationships will generate repeat business and referrals years from now.

“Borrowers are more savvy than ever before,” said Sara Holtz, VP of Demand Marketing and Communications at ICE Mortgage Technology. “Many people are comfortable waiting out current market fluctuations until just the right scenario presents itself for a refinance. Smart lenders will use this time to stay top of mind for future borrowers, and prioritize efforts like staying in touch with customers, keeping current and prospective borrowers up-to-date on market trends, and educating them on creative lending options that are available for a variety of circumstances.”

Whether the market continues on its current course, or falling interest rates create a surge of purchase and refinance activity, building the right technology and maintaining healthy borrower relationships will help ensure that in an unpredictable future, lenders can still experience a steady and growing stream of business.

Click here to download the 2023 ICE Mortgage Technology Borrower Insights Survey eBook.