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Overall Sentiment Towards Most Mortgage Options Unfavorable
By James Comtois
Possibly as a result of the negativity surrounding the subprime mortgage market, the majority of consumers have questioned the credibility of the current marketing and advertising for mortgage products, according to the results of a recent poll conducted by Harris Interactive.
Just one-third of U.S. adults (34%) view the advertising and marketing of mortgage products as credible, with the majority (66%) viewing it as not credible. In fact, one in five adults (22%) report that they view the advertising and marketing of these products as "not at all credible."
These are some of the results of a Harris Poll of 2,383 U.S. adults that Harris Interactive conducted online between May 8 and 14, 2007.
When probed further about their perceptions of the financial institutions that provide mortgages, only one-quarter (27%) of U.S. adults report favorable perceptions, with just 3% saying their perceptions are very favorable.
"Given the large proportion of consumers who are riding the fence, now more than ever would be a good time for these institutions to examine their mortgage product advertising and marketing messages," said Sanford Brumley, vice president of Client Development for the Harris Interactive Financial Services Group.
The study highlights that advertising favorability does not always equate to favorability towards the institution offering the mortgage products. For example, African Americans are more inclined than Whites or Hispanics to view marketing/advertising for mortgages as credible (44% vs. 33% and 34% respectively).
At the same time, however, they exhibit the most negative sentiment toward institutions providing these mortgage products, as one-third (37%) of African Americans have an unfavorable opinion compared to one-quarter (26%) of Whites and one-third (30%) of Hispanics.
"The data further emphasize why a 'one size fits all' approach is not effective in terms of the messaging used to inform and educate consumers about mortgage offerings," said Natalie Jobity, vice president of Research for the Harris Interactive Financial Services Group. "This is especially true when communicating to different ethnic groups."
Although the overall sentiment towards various mortgage options is generally unfavorable, there is one major exception: fixed-rate mortgages. Fixed-rate mortgages have the highest level of favorability with 71% of those who are aware of the product reporting that they feel favorable about them. More than half (52%) feel favorably towards home equity loans, but even so, just 15% of them say they feel very favorable towards it.
Among the other options, one quarter of adults have a favorable impression about no/low down payment (27%) as well as reverse mortgages (25%). More than half feel unfavorably towards adjustable rate mortgages (53%), while at least three in five feel unfavorably towards interest only mortgages (60%) and balloon mortgages (68%).
Consumer awareness of mortgage products is high with 78% being aware of home equity loans, 74% of ARMs, 72% of fixed rate mortgages and 71% of no/low down payment options. Even among the newer mortgage products available awareness is high with six in ten consumers reporting familiarity with balloon (64%), reverse (64%) and interest only (63%) mortgage options.
Additionally, older adults are significantly more aware of the various mortgage products than younger consumers.
Consumer knowledge of fixed rate mortgages and home equity loans is the highest among the different mortgage options. Among those who are aware of the products, two-thirds (68%) are knowledgeable about fixed rate mortgages and 65% are knowledgeable about home equity loans.
More than half of consumers report being knowledgeable about ARMs (58%), Balloon (52%) and Interest only (52%) offerings. Just half say they are knowledgeable about no/low down payment and reverse mortgages (49% for each).
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