Top Factors Influencing Homeowners Seeking Refinance Loans

In 2020, the dramatic decline in mortgage interest rates paired with economic uncertainty caused a surge in the mortgage market. Refinance loan volume hit record highs, and refinance originations closed out at a record-breaking $2.8 trillion, according to data from Black Knight. Responding to major market growth and demand, many mortgage lenders, brokers and banks rushed to expand their teams — hiring in all areas from processing and underwriting to origination and closing. For the majority of 2021 thus far, refinance loans represented a 60% share of all mortgage loan volume, according to the Mortgage Bankers Association (MBA). While the pool of refinance borrowers may be smaller than in 2020, refinance mortgage loan marketing should still be a priority for lenders and mortgage marketers. 

With many borrowers having refinanced recently, but mortgage rates still historically very low, lenders and mortgage marketers should strive to understand consumer motivations and trends surrounding refinance loans. Leveraging consumer survey data, Digital Media Solutions (DMS) is spotlighting the latest consumer trends and major influencing factors impacting homeowners seeking refinance loans as of April 2021. The data presented can help mortgage brands and advertisers more effectively target refinance audiences and scale their borrower bases. 

Homeowners Embrace Refinance Again And Again, With Repeat Refis On The Rise 

While 2020 was a hot year for refinances, 2021 consumer trends and data indicate many homeowners are embracing the benefits of refinancing multiple times. Data from the DMS consumer survey collected responses from more than 250 homeowners, age 18 and older, across the U.S who had refinanced their mortgages at least once previously or are considering a future refinance. According to DMS survey responses, when asked, “How soon are you considering refinancing,” slightly more than 10% of homeowners who refinanced in 2020 are considering refinancing within the next three months or sooner. Younger homeowners, ages 18 to 34, showed the greatest intent to refinance multiple times. 

The Market Remains Prime For Repeat Refinances Among Homeowners

Homeowners may be more inclined to refinance multiple times because of the added convenience and efficiency offered by lenders and financial institutions that have transitioned to an almost entirely digital mortgage loan process. During the onset of the pandemic in Q2 2020, many lenders, financial institutions and banks shifted their workforces to be almost completely remote. This transition to working from home required lenders to use more digital tools and technologies to streamline the loan process while working with borrowers from a distance. Therefore, an experience that once seemed time-consuming and complicated for consumers evolved to reduce friction and enhance the borrower experience — resulting in a positive impact on customer satisfaction. 

Securing A Lower Loan Interest Rate Remains The Top Motivating Factor Among Homeowners 

Even with some rate fluctuations, in 2021, interest rates across all three major mortgage loan types mirror lows not seen since 2016 and 2013. In fact, borrowers did not see interest rates fall below 4% at any point from January 2018 to May 2019. Not surprisingly, according to data from the recent DMS consumer survey, “securing a lower interest rate” is a top motivating factor for seeking a refinance this year.

Younger Homeowner Segments Want To Reduce Expenses & Increase Savings

Gen Z and Millennial homeowners are also motivated by the opportunity to secure lower interest rates through refinancing, with 56.9% selecting “securing a lower interest rate” as a key motivational factor, according to DMS survey data. Gen Z and Millennial-aged homeowners also noted other savings-related motivations as additional factors influencing their refinance decisions. These savings-related reasons include lowering monthly mortgage payments , lowering overall payments and removing PMI. As the generations that have witnessed the impacts of student loan debt, underemployment and the Great Recession, Millennial and Gen Z consumers typically value financial security and stability and remain wary of the long-term costs of debt.  

Lender & Bank Websites Dominate As Top Options For Homeowners Initiating Refinance Research

Data from the DMS consumer survey on refinance mortgage trends shows that approximately half of all homeowners plan to use a bank website or rate comparison website to initiate their refinance research. Homeowners ages 18 to 34 are almost twice as likely to heavily rely on bank or lender websites.

Online Comparison Shopping For Refinance Loan Options Turns Up Heat For Lenders

As homeowners leverage the power of digital platforms and technology for their mortgage research, comparison shopping increases competition among lenders. Data from the DMS consumer survey on mortgage refinance trends shows that 43% of respondents plan to research two to five refinance loan options, with just 10% planning to research either only one loan option or more than five options. However, 18 to 34 year olds were more than twice as likely as the general populace to indicate plans for researching six or more loan options.

Mortgage Marketers Turn To Performance Marketing To Scale Refinance Loan Inquiries

According to Joey Liner, DMS CRO, while the organic customer-relationship management system (CRM) was enough to fuel pipeline growth in 2020, mortgage marketers and lenders may need to reposition their customer acquisition efforts as that tap dries out this year. In a video interview, Liner detailed how interest rate fluctuations affected organic loan volume at the end of Q1 2021, stating, “[Mortgage marketers] are now looking at the performance marketing landscape asking for more inquiries.” 

About The DMS 2021 Refinance Mortgage Consumer Trends

The DMS 2021 Refinance Mortgage Consumer Trends online survey revealed major influencing factors that impact consumer decisions connected to early milestones in the refinance mortgage loan process. Data is based on online survey responses of more than 250 homeowners aged 18 and older across the U.S. All survey respondents were homeowners that had refinanced at some point previously or were considering refinancing in the future.

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