The fact that more recent home purchasers used cash rather than finance their transaction quantifies how competitive the market has been since the pandemic started.
Approximately 43% of all respondents to a ServiceLink survey said they used cash on hand or savings to purchase their home, while 42% went to a traditional lender to finance it. That gap widens when the question was asked of those who purchased in the last year, to 50% using cash or savings, and 32% financing from a traditional lender.
Among all respondents, 14% said they went to a digital or online lender; that increased to 32% among those that bought in the last year.
Respondents were able to choose more than one option for this question.
In March, Redfin said a cash offer
"The COVID-19 pandemic and market conditions forced the real estate industry to reassess how it serves today's homebuyer," Dave Steinmetz, president of origination services at ServiceLink, said in a press release. "With the evolution of technology to help streamline the process, it's not surprising that our data found consumers are turning to tech-enabled providers who can meet their needs through any phase of the process."
ServiceLink, which is a subsidiary of Fidelity National Financial, surveyed 1,000 homeowners that were interviewed by Market Cube between April 14 and April 19.
Among those who purchased a home last year, 27% said they borrowed against their 401(k) account for funds, compared with just 9% who bought a home in prior years. Baby boomers, a group closer to retirement age, were least likely to touch those accounts, at 1%, compared with Gen X (11%) and Gen Z/millennials (17%). Younger people may be more likely to dip into or even liquidate those funds
Borrower education efforts paid off for lenders, the survey found, with 73% of those that bought a house in the last year responding that they felt fully informed about the process. This was up from 59% of those who made their purchase prior to 2020.
But the survey did find a disparity between those that used an online lender versus those that used a traditional lender. A breakdown of the numbers shows a disparity between online lenders and traditional lenders. Nearly three-quarters, 72%, of online lender customers felt they were fully informed about the home buying process, but that was only true for 58% that used a traditional lender.
Meanwhile the survey found that only 30% of existing borrowers refinanced last year, with younger borrowers more likely to take advantage of the opportunity.
The youngest demographic had the highest share of refinancers as 45% were Gen Z/millennials, while 30% were in the Gen X group and just 6% of baby boomers.
When asked why they did not refinance, 40% of borrowers said they had a rate they were comfortable with, while 27% wanted rates to fall further. Another 18% said closing costs were too high, 13% called the process too time intensive to undertake and 7% said they did not know how to start the process.
These results matched a similar survey taken in late April by Zillow, which found that in the preceding 12 month period, just 22% of respondents refinanced their home (although it did find that 59% had done a refi at least once at some point while owning their current property).
When asked why they did not refinance, 37% reported that they were considering moving or paying off their mortgage soon, and 38% said fees were too high. About 29% of homeowners did not refinance because they didn't understand the process, Zillow said.
"In general refinancing a mortgage should be a bit less intense than a few weeks away at puppy boot camp," Jonathan Lee, Zillow Home Loans senior director, said in a press release. "A few hours of online shopping, talking to a mortgage professional and signing documents is a small price to pay for hundreds of dollars in potential savings per month, and goes a long way toward funding those dog training classes."
The ServiceLink survey had some good news for lenders: they are largely succeeding
