Online Mortgage Pitfalls
Few dispute the usefulness of the Internet for finding
information about mortgages and related subjects. Similarly,
few dispute the fact that the Internet is an excellent
source to compare rates and terms for different lenders.
Given these statements, many have searched for an explanation
of why only a small fraction of mortgages are actually
Many people have written this off as a consequence
of the psychological barriers to purchasing online.
They believe consumers are particularly reluctant to
engage in such a large and important transaction as
a home loan online.
Note, though, that a recent study by Foolproof, an
online consultancy firm, has found this may not be the
case. The study shows that almost half of those in the
market for a mortgage would like to research online,
while almost a full third (thirty percent) say they
would like to apply online for a loan.
It appears, Foolproof suggests, that the factor stopping
many of these consumers from actually buying online
is the experience of online searching. The first pitfall
commonly encountered in this area is getting past the
search engine results. For example, if you type “cheap
mortgages” into Google, many of the first sites
that appear aren’t relevant to the common browsing
consumer. There is a glut of mortgage directory sites
within these results, often lacking any quality control.
Consumers don’t trust these sites’ recommendations,
and they may give up on the online process entirely.
Another problem is the high number of sites aimed at
those with poor credit, seeking a sub-prime loan. These
loans have high profit margins, but are inappropriate
for the majority of consumers looking for a mortgage
The best comprehensive sites have difficulty placing
high on search engines because they have to provide
lots of unrelated content on the other services they
offer (credit cards, for example), and will often be
edged out by smaller broker or directory sites.
This is particularly important because the study also
finds that consumers hardly ever move past the first
page of search engine listings. This results in many
useful sites not being viewed.