* Survey: 80 pct of consumers would consider non-bank
* Cost, service and trust key factors in selecting loan
* 70 percent would prefer mortgage with primary bank
By Rick Rothacker
CHARLOTTE, N.C., Dec 3 One in three U.S.
consumers would consider a mortgage from retailer Wal-Mart
and almost half would consider one from online payment
provider PayPal, according to a financial services study to be
released on Monday.
The results should be especially disconcerting for banks
because the two companies don't even offer mortgages.
The study shows consumers are willing to try alternative
lenders as borrowers focus on price, customer service and trust
in their provider when selecting a mortgage, said Doug Hautop,
lending practice lead at the Carlisle & Gallagher Consulting
Group, which conducted the survey.
"There is a real threat from new entrants," Hautop said.
The study's results were based on online responses from 618
U.S. consumers in September.
Non-bank mortgage companies such as Quicken Loans and
Nationstar Mortgage Holdings Inc have been gaining
market share as some large banks such as Bank of America Corp
pull back in a business that burned them during the
Carlisle & Gallagher, based in Charlotte, North Carolina,
provides consulting services to five of the top eight U.S.
mortgage originators, Hautop said.
A Wal-Mart Stores Inc spokeswoman declined to comment on the
survey. The retailer provides small business loans at its Sam's
Club stores, but doesn't offer mortgages.
A spokesman for PayPal Inc, a subsidiary of online auction
site eBay Inc, said it offers credit lines for customer
purchases, but hasn't announced any plans to move into the
BASIC BANKING BACK IN STYLE
It's not unheard of, though, for retailers to enter the
mortgage business. In late 2011, warehouse retailer Costco
Wholesale Corp began offering home loans online through
select lenders. The company doesn't disclose loan volume, but
the service has gone well, said Jay Smith, Costco's director of
"We have tried to make it a service where members see
significant value on rates and fees," Smith said.
While the Carlisle & Gallagher survey found that 80 percent
of U.S. consumers would consider a mortgage from a non-bank,
there was a bright spot for traditional banks. Seventy percent
of respondents said they would prefer to have their mortgage
with one of their main banks, although only 39 percent currently
Two-thirds of respondents said the high cost of getting a
loan was the most painful aspect of the mortgage application
process, followed by slow execution (56 percent) and poor
communication with the lender (32 percent).
"Banks have a captive audience, and have folks who are
willing and wanting to do business with them," Hautop said.
"It means it's time to go back to the basics for our banks."
In the past year, banks, including Wells Fargo & Co
and JPMorgan Chase & Co, have benefited from surging
consumer demand to refinance their mortgages at low interest
rates. But in the coming year, refinancings are forecast to
decline, so banks will need to focus more on serving customers
taking out loans to purchase homes, Hautop said.