Last year, home buyers preferred to use cash instead of getting a mortgage

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The fact that more recent home buyers were using cash rather than funding their transactions quantifies how competitive the market has been since the start of the pandemic.

Approximately 43% of all ServiceLink survey respondents said they used cash or savings to buy a home, and 42% turned to a traditional lender to finance it. This gap widens when the question of who bought in the past year increases to 50% using cash or savings and 32% funded by a traditional lender.

Among all respondents, 14% said they had applied to a digital or online lender; this increased to 32% among those purchased last year.

Respondents could choose more than one answer to this question.

In March, Redfin announced a cash offer. increased the likelihood the seller’s acceptance by 290%, according to the analysis of transactions made through his agents.

“The COVID-19 pandemic and market conditions have forced the real estate industry to rethink how it serves today’s home buyers,” Dave Steinmetz, president of Primary Services at ServiceLink, said in a press release. “With the advancement of technology to help streamline the process, it’s no surprise that our data has shown that consumers are turning to suppliers that support technology that can meet their needs at any stage of the process.”

ServiceLink, a subsidiary of Fidelity National Financial, surveyed 1,000 homeowners surveyed by Market Cube between April 14-19.

Among those who bought a home last year, 27% said they had borrowed a 401 (k) account, compared with 9% who bought a home in previous years. Baby Boomers, the retirement age group, were the least likely to touch these accounts at 1%, compared to Gen X (11%) and Gen Z / Millennials (17%). Younger people may be more likely to dive into or even liquidate these funds. use for other purposes.

The survey found that the efforts to educate borrowers paid off: 73% of those who bought a home in the last year responded that they felt fully aware of the process. That’s up from 59% of those who made a purchase before 2020.

But the survey did find a mismatch between those who used an online lender and those who used a traditional lender. The breakdown of the numbers reveals the mismatch between online lenders and traditional lenders. Nearly three-quarters, 72% of online lender customers believe they are fully aware of the home buying process, but this is true only of 58% who have used traditional lenders.

Meanwhile, the study found that only 30% of existing borrowers refinanced in the past year, and younger borrowers are more likely to take this opportunity.

The youngest demographic had the highest proportion of refinancing organizations, as 45% were Gen Z / Millennials, while 30% were Gen X and just 6% were Baby Boomers.

When asked why they did not refinance, 40% of borrowers answered that they have a rate that they are happy with, and 27% would like the rates to be even lower. Another 18% said the costs of closing are too high, 13% said the process was too time-consuming, and 7% said they did not know where to start.

These results are in line with a similar survey conducted by Zillow in late April, which showed that in the previous 12-month period, only 22% of respondents had refinanced their home (although 59% were found to have refinanced at least once at some point). owning their current property).

When asked why they didn’t refinance, 37% said they were considering moving or paying off their mortgage in the near future, while 38% said the fees were too high. About 29% of homeowners did not refinance because they did not understand the process, Zillow said.

“Overall, mortgage refinancing should be a little less intense than a few weeks at puppy boot camp,” Jonathan Lee, senior director at Zillow Home Loans, said in a press release. “A few hours of shopping online, talking to a mortgage specialist, and signing paperwork is a small price to pay for potential savings of hundreds of dollars a month, and it goes a long way in funding these dog training courses.”

The ServiceLink poll brought good news for lenders: they are doing pretty well. in retaining their existing customers. When considering refinancing, over 43% first approached their current lender, and only 28% applied to a new lender.



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