33% say they would buy a mortgage at Wal-Mart

5 hrs.

Reuters

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 financial crisis.?

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 mortgage business.?

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 financial services.?

"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 do so.?

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.?

Source: http://www.nbcnews.com/business/33-say-they-would-buy-mortgage-wal-mart-1C7376581

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