|
Subprime Borrowers Drive Growth in Online Home Loan Applications
By James Comtois
The number of mortgage, refinancing and home-equity loan applicants grew 21% in June compared to June 2006, driven largely by the activity of subprime applicants, according to a new survey conducted by a Reston, Va.-based provider of digital marketing intelligence.
According to comScore Inc.'s study, which examined how consumers with different credit ratings shop and apply for home loans online, the growth in online home loan applications was driven by a 66% increase in home mortgage applications, where growth among subprime applicants, at 73%, outpaced growth among prime applicants at 58%.
The comScore study examined home loan applications on Quicken Loans, E-Loan, DiTech, LowerMyBills, Bank of America, Wells Fargo, Countrywide, Capital One, Citibank, LendingTree, GetSmart and 14 other mortgage lending sites in June 2007 and June 2006. Online shopping behavior was based on 2Q07.
Home refinancing applicants grew 26% overall during this period, with the growth rate among subprime borrowers (at 44%) more than tripled that of the prime applicants (at 14%). Meanwhile, the number of home-equity loan applicants decreased as the softening real estate market reduced the availability of homeowners to borrow against the value of their homes, with higher interest rates also making such loans less attractive.
Brian Jurutka, senior director of comScore Marketing Solutions, said in a statement that this data provides an indicator that "the high-risk credit segment is getting squeezed on mortgage payments, likely due to increases in their adjustable rates."
"While the number of mortgage and refinance applicants gained across the spectrum, the subprime segment jumped by a disproportionate amount," he added. "The entire economy is feeling the effects of the credit pinch, but it's the subprime borrowers that are really scrambling to find alternatives to financing their mortgages."
Another finding in comScore's study was that, on average, applicants visited three sites (within the sets of sites examined) before applying for a refinance loan online. Also, pre-application shopping behavior revealed that applicants were more likely to visit aggregator sites such as LendingTree.com, LowerMyBills.com and ELoan.com.
The top originator site for mortgage applications, according to the study, was QuickenLoans.com. The top originator site for refinancing was WellsFargo.com.
More subprime news
| 
