Are borrowers shopping more for mortgage?
In today's competitive mortgage market, understanding borrower behavior is crucial for lenders seeking to remain competitive and provide exceptional service. One key trend that has emerged in recent years is the rise of mortgage shopping, particularly in response to changing interest rates. By analyzing Home Mortgage Disclosure Act (HMDA) data on preapproval requests, we can gain valuable insights into this trend and its implications for the industry.
Why preapproval requests?
One of the most valuable tools for gaining insights into borrower shopping behavior is the analysis of loan-level data on preapproval requests. By examining this granular data, mortgage professionals can uncover trends, patterns, and preferences that might otherwise go unnoticed. Loan-level data provides a detailed look at individual preapproval requests, offering a wealth of information about each borrower's unique circumstances, preferences, and actions. This granular data allows mortgage marketers to move beyond aggregate statistics and gain a more nuanced understanding of borrower behavior.
We saw significant increase in both the absolute number and relative share of Preapproved Not Accepted applications in 2023 compared to previous years. In 2023, the number of Preapproved Not Accepted applications rose to 171,348, up from 128,407 in 2022, representing a year-over-year increase of more than 33%. Moreover, when we look at the share of Preapproved Not Accepted applications within the total preapproval requests, it has notably increased in 2023.
