J.D. Power and Associates Reports: Record Low Interest Rates Help Boost Mortgage Customer Satisfaction

USAA Ranks Highest in Customer Satisfaction for Second Consecutive Year Among the Largest National Home Mortgage Lenders

November 12, 2003

WESTLAKE VILLAGE, Calif.�Driven primarily by record low interest rates, customer satisfaction with home mortgage lenders has increased for the second consecutive year, according to the J.D. Power and Associates 2004 Home Mortgage StudySM released today.

“We�re coming off a period where the personal mortgage industry has experienced unprecedented levels of activity, galvanized by the lowest interest rates in nearly 40 years,” said Jeremy Bowler, director of the finance and insurance practice at J.D. Power and Associates. “The industry continues to make improvements in customer satisfaction and some individual lenders have made dramatic year-over-year jumps. Provided their lenders have not failed to meet expectations in some way, most mortgage customers are pretty happy right now.”

The study finds that more than three-quarters of consumers who rate their satisfaction with their mortgage lender a “10” on a 10-point scale will consider their mortgage service provider when returning to the market. Fewer than one-half of consumers who rate their lender a “9” will recommend their lender to others. That percentage drops to less than 25 percent among consumers who rate their lender an “8.”

“There are literally thousands of lenders out there for someone seeking a home loan, which means there are plenty of options for consumers,” Bowler said. “Consumers who have even only one bad experience with a lender are probably not going to go back to that lender. They�re also likely to tell their friends and family members about that bad experience, meaning word can spread quickly.”

Customers who remain with the lender that originated their mortgage are far more satisfied than those whose mortgages have been resold to another lender. Among the 26 percent of all customers who experience this transition to a new lender, only one-third indicate that they would definitely consider using their new service provider for their next mortgage.

For the second consecutive year, USAA ranks highest in overall customer satisfaction. USAA scores higher than the other 30 lenders included in the study in each of the four factors that impact overall satisfaction. The factors, listed in order of importance, are: day-to-day administration of the account; billing and payment process; customer-initiated contact experience; and the loan origination process.

Branch Banking & Trust, SunTrust, Countrywide, which makes a dramatic year-over-year improvement, and Wells Fargo round out the top five individual lenders in the overall satisfaction ranking. Bank One shows the largest year-over-year improvement in the study, while U.S. Bank makes an impressive debut, scoring well above industry average. Many smaller, often regional lending institutions (grouped as “other (specified)” in the ranking), also perform very well in the study.

“There is a move to centralize the day-to-day servicing of mortgages,” Bowler said. “The challenge lenders face is to deliver the same quality of customer care and still remain economically competitive. USAA has done an exemplary job of delivering personalized service to its members.”

For many financial institutions, the answer has been to form strategic relationships with other lenders. USAA, for example, has maintained a 13-year relationship with PHH/Cendant Corporation to handle part of its day-to-day loan origination and servicing needs of its mortgage customers. More recently, USAA also teamed with GMAC Mortgage Corporation for the same purposes.

The 2004 Home Mortgage Study is based on responses from more than 11,900 home mortgage customers and involves the largest national home mortgage providers.

Headquartered in Westlake Village, Calif., J.D. Power and Associates is an ISO 9001-registered global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction.