TransUnion's survey found four in five recent home buyers say their mortgage payments are straining their finances and are looking to refinance their mortgage payments in the next 12 months.

Many Recent Home Buyers Say Their Current Mortgage Payment is a Strain on Their Personal Finances

Percent of Recent Home Buyers Who Anticipate Refinancing Their Mortgage in the Next Twelve Months if Rates Fall

Source: TransUnion U.S. consumer survey

When asked the biggest factor that would ultimately drive them to pull the trigger on a refinancing decision, 70% of these recent home buyers said that a more favorable loan term would be a key driver for them. However, a nearly identical percentage said that better interest rates (67%) and a cash-out refinance (61%) would also be significant drivers, reflecting broad economic interest.

"For many of these recent home buyers, their mortgage payment is their largest single payment each month," said Satyan Merchant, senior vice president and mortgage and auto business leader for TransUnion. "The upside is that it is a payment that can be refinanced if the economic climate allows for it, and as interest rates begin to fall, this group of consumers should begin exploring this option. Conversely, lenders should be actively marketing to these refinance candidates, regardless of what their primary motivation to refinance may be."

Similar Consumer Sentiments Found When Asked About Auto Loans

The survey also examined consumer sentiment towards their existing auto loans, payments and interest rates along with future plans regarding refinancing. Results indicated that there was a similar eagerness to refinance when interest rates eventually fall, and a similar response among consumers when asked if they feel that their current auto loan payments represent a strain on their household finances.

When asked the extent to which they agree that their current auto loan payment represented a strain on their personal finances, 65% of respondents indicated that they agree or strongly agree with this statement as opposed to 20% who disagree or strongly disagree. Nearly the same percentage of respondents, 63%, indicated that they were likely or very likely to refinance their existing auto loans if it could save them money on their monthly payments. 52% of respondents indicated they would consider refinancing if it would save them between $50 and $149 monthly.

The research also explored the sentiment of consumers who have already refinanced despite the relatively high interest rates. Many of these borrowers derived lower payments through longer terms.

From this standpoint, TransUnion data shows that credit unions continue to lead the way with 67% of the refinance share in 2023. Banks had the second largest share, at 20%. These figures have remained relatively stable in recent years and underscore consumers' favorable perception of credit unions when they begin exploring refinancing opportunities.

"Credit unions may be able to offer their members rates and service that larger more traditional banks cannot," said Sean Flynn, senior director of community financial institutions at TransUnion. "Credit unions should lean into this fact and leverage available tools such as trended data and advanced analytics to seek out those consumers who may be able to refinance."

To learn more about how TruIQ^TM by TransUnion helps lenders make better, data-driven decisions faster with advanced analytics consulting services and enabling technologies, click here. To learn how TruVision^TM allows lenders to use trended data to more precisely balance risk and opportunity with risk management products that identify and manage best-fit customers across the account lifecycle, click here.

To learn more about the analysis above, click here.

Public link

Please use the above public link if you want to share this noodl on another website.