A NEW LOOK AT THE CONSUMER CREDIT MARKET (Nov 2017)

Cards, Lines, and Loans

Secured and Unsecured Lending

Traditional vs. Alternative Lenders

Key Finding from a Previous Report:

In the 2014 Phoenix Synergistics survey, Revitalization of the Consumer Credit Market, findings revealed that only a minority have at some point received educational material or other information from a financial institution about credit topics – such as building a good credit history or managing debt.To what extent have educational efforts on the part of lenders  improved, and how valuable is it to consumers to receive this type of information?

Research Description and methodology

This study examines consumer usage of credit cards, auto loans, home equity credit, and secured and unsecured personal loans and lines of credit.  Usage of traditional and alternative lenders and the need for credit education are also addressed.

National Internet Survey – The survey will include 1,500 internet interviews with consumers age 18 or older.

Key Dates

August 18, 2017 – Final acceptance of client comments on the questionnaire.

August 18, 2017 – Charter fee date.

October 2017 – Initial results available.

November 2017 – Project Report available.

Strategic Objectives

  • Profile the current credit activity of consumer households in terms of credit products and services used, providers, and outstanding balances.  Assess consumers’ attitudes and perceptions regarding positive or negative outlooks about credit usage.  Measure experience with alternative credit providers.
  • Measure credit needs among consumer households in the next year.  Determine purposes for which credit will be needed.  Ascertain what credit products consumers expect to use for various needs.
  • Examine consumers’ credit card activity – including brands/types used, frequency of usage, and charge volume.  Gauge the extent to which credit cards are used strictly as a transaction device versus a revolving credit source.  Assess competitive factors such as balance transfer activity and proprietary in-store financing.
  • Assess consumer experience with a number of credit products.  Profile automobile financing/acquisition – including loans, leases, cash, or other forms of credit.  Examine usage of personal lines of credit and personal loans – encompassing secured vs. unsecured products, purposes for using, reasons obtained instead of other credit, and outstanding balances. Determine the purposes for which home equity credit – revolving lines and fixed loans – is used by homeowners.
  • Investigate the consumer shopping process for credit.  Evaluate important product features, useful sources of information, expected first steps or contacts, and preferred application channels.
  • Examine consumer experience with and reaction to measures of creditworthiness – including traditional credit (FICO) scores, credit reporting services, and scores provided by FIs.  Determine preferred sources of credit information or education.
  • Determine which demographic, behavioral, or attitudinal traits are best for segmenting and targeting the market for consumer credit services.  Evaluate which segments represent the best future potential for expanding credit relationships.

Research Issues

  • The U.S. credit markets appear to have returned to some semblance of “normality” and there is a more positive outlook for growth than has existed for a number of years.  At the same time, interest rates are gradually increasing.  With this in mind, providers must consider marketing strategies and tactics, as well as product configurations and the positioning of their credit products and services – including credit cards, auto loans, home equity credit, and personal loans and lines of credit. Important provider and product features must be identified that will add value and differentiation for consumers in the credit shopping process. Recently, a number of  lenders have been actively promoting secured and unsecured personal loans and lines of credit.   When consumers today need credit, they have a myriad of choices available.
  • Providers must consider that the variety of information and tools for credit education and debt management may result in smarter shoppers who scrutinize credit products more than ever before.  The role and impact of the wide array of online and mobile information channels and sources – including shopping and comparison sites or apps, blogs, and social media of all types – must be taken into accounts.
  • The availability of alternative providers as a credit source for consumers – such as online-only providers, peer-to-peer lenders, and providers serving higher risk segments – is a potentially disruptive market development that must be assessed.  Traditional banks, credit unions, and lenders of all types must understand the needs, wants, and perspectives of credit users going forward.

HOME EQUITY LENDING MONITOR 2017 (Nov 2017)

Activation, Retention, and Re-Marketing

Product Features and Pricing

Marketing Channel Mix

Key Finding from the Report:

Findings from Phoenix Synergistics previous reports in the Home Equity Lending Monitor Series (2006 to 2016) revealed that the proportion of homeowners who have
home equity credit has been stable.

Research Description and methodology

The Home Equity Lending Monitor was launched in 2001 to track and measure important issues in the home equity lending market.  This current project is the seventeenth in the series. The Monitor features a number of multiphase research elements including an extensive national consumer survey, a client presentation, and a strategically oriented project report.  This annual monitor will benefit the entire home equity team including market research, product management, database marketing, communications and advertising, and risk management.

National Internet Survey – 2,500 total online interviews with homeowners including 1,125 equity loan/line holders and 375 equity loan/line prospects.

Key Dates

May 26, 2017 – Charter fee/Intro pricing ends.

May 26, 2017 – Final acceptance of comments on questionnaire.

October 2017 – Initial results available.

November 2017 – Project Report available.

Strategic Objectives

  • Size the home equity market and evaluate trends in a changing environment.
  • Assess the impact of the housing and credit markets on consumer behavior.
  • Determine provider selection factors and measure satisfaction with current and/or past equity loan providers.
  • Identify key target markets.
  • Monitor the changing mix of marketing and distribution channels used for home equity lending.
  • Evaluate product features, new product concepts, and pricing structures.
  • Examine the consumer decision making process regarding home equity credit and competing credit products.
  • Identify strategies for acquisition, activation, retention, and remarketing.

Research Issues

  • For retail banks, the home equity market is extremely important.  It is an attractive market in terms of the types of borrowers it draws – serious, upper- income consumers.  Delinquencies are low compared to other forms of lending.  For both borrowers and lenders, it is a win-win.
  • This monitor has tracked ongoing trends and new developments in the home equity credit market annually since its inception in 2001.  A primary objective each year is to gauge the overall size of the market – as defined by current users and prospects.  Recent findings have suggested an improving market in conjunction with a recovering housing market.  However, rising interest rates may impact this market going forward.  Ongoing analysis of these trends is of critical importance.
  • Key measures assessed over time include activation and utilization rates of revolving equity lines, the purposes of using loans and lines, important criteria in choosing providers and products, response to fees and other pricing, and channel usage for marketing, acquisition, and customer service.  Of special interest is ongoing analysis of the perspectives and intentions of equity credit ex-users, with an emphasis on strategies and tactics for re-marketing. Phoenix Synergistics survey will provide a greater understanding of the consumer perception and usage of home equity credit.

MORTGAGE MARKET MONITOR 2017 (Apr 2017)

Decision Making and Application Process

Sources of Information and Advice; Education

Relationship Acquisition and Expansion

Major Competitive Lender Profile

Key Finding from the Report:

Findings from the Phoenix SYNERGISTICS 2016 Mortgage Market Monitor reveal that nearly six in ten homeowners report having a first mortgage. Incidence of first mortgages is found to be highly correlated with age, declining as age increases.

MM2 Prop Graphic

Research Description and methodology

The 2017 edition of the Mortgage Market Monitor is the second in this series and is being conducted to track and measure the many aspects of the consumer mortgage shopping and decision process.

National Online Survey – 2,000 total interviews with financial decision makers age 18+, with a particular focus on current homeowners and buyers entering the market.

Key Dates

January 27, 2017 – Charter fee/Intro pricing ends.

January 27, 2017 – Final acceptance of comments on questionnaire.

March 2017 – Initial results available.

April 2017 – Project Report available.

Strategic Objectives

  • Size the mortgage market and evaluate trends in a changing environment.
  • Examine the consumer decision making process and sources of information and advice regarding mortgages.
  • Identify strategies and key target markets for acquisition, expansion, and retention.
  • Determine provider selection factors and measure satisfaction with current and/or past mortgage loan providers.
  • Assess the impact of the housing and credit markets on consumer behavior.
  • Monitor the ongoing impact of refinancing.
  • Assess the competitive landscape – comparing major mortgage lenders.

Strategic Issues in the Mortgage Market

  • The 2016 inaugural edition of the Mortgage Market Monitor found a housing market that had stabilized and was in fact showing promising growth potential after many years of uncertainty.  This annual study is designed to assess and track trends related to the many elements of the consumer mortgage shopping and decision process – encompassing aspects such as product design, preferred information channels, the importance of pricing in relation to other features, and application and servicing channels.
  • Refinancing, almost always surprisingly active, continues to have some impact on the mortgage market.  Another important factor is the potential for rising interest rates in the near future and how this may affect consumers’ decisions.  Examining and evaluating the channel mix in the mortgage shopping, application, and servicing process is critical, particularly in terms of how newer channels relate and intersect with in-person or branch-based contact.
  • The 2017 Mortgage Market Monitor will assess the behavior and perceptions of a national internet survey of 2,000 consumers age 18+ – with a particular focus on current homeowners and buyers entering the market.

16TH ANNUAL HOME EQUITY LENDING MONITOR (Nov 2016)

– “Banks Ramp Up Push for Home-Equity Lines” – The Wall Street Journal, March 26, 2016

 

– “Home Equity Credit Lines Boom 20% in 2015” – USA Today, March 28, 2016

Strategic Issues in the Home Equity Market

  • For retail banks, the home equity market is extremely important.  It is an attractive market in terms of the types of borrowers it draws – serious, upper- income consumers.  Delinquencies are low compared to other forms of lending.  For both borrowers and lenders, it is a win-win.
  • This monitor has tracked ongoing trends and new developments in the home equity credit market over its various waves since its inception.  A primary objective each year is to gauge the overall size of the market – as defined by current users and prospects.  Recent findings have suggested an improving market in conjunction with a recovering housing market; ongoing analysis of that trend is of critical importance.
  • Key measures assessed over time include activation and utilization rates of revolving equity lines, the purposes of using loans and lines, important criteria in choosing providers and products, response to fees and other pricing, and channel usage for marketing, acquisition, and customer service.  Of special interest is ongoing analysis of the perspectives and intentions of equity credit ex-users, with an emphasis on strategies and tactics for re-marketing. SYNERGISTICS survey will provide a greater understanding of the consumer perception and usage of home equity credit.

Key Finding from a Recent SYNERGISTICS Survey:

Findings from SYNERGISTICS previous reports in the Home Equity Lending Monitor Series (2002 to 2015) revealed that the proportion of homeowners who have home equity credit has been stable.

HELM 2016 Prop Graphic

Research Description and Methodology

The Home Equity Lending Monitor was launched in 2001 to track and measure important issues in the home equity lending market.  This current project is the sixteenth in the series. The Monitor features a number of multiphase research elements including a background research, an extensive national consumer survey, a client presentation, and a strategically oriented project report.  This annual monitor will benefit the entire home equity team including market research, product management, database marketing, communications and advertising, and risk management.

National Internet Survey – 1,000 total interviews with homeowners including 450 equity loan/line holders and 150 equity loan/line prospects.  For comparison purposes, and to permit tracking from previous telephone surveys, the survey will be conducted using a two-prong approach with 80% of the interviews being conducted via the Internet and 20% by telephone.

 

Key Dates and Sponsorship

May 27, 2016 – Final acceptance of comments on questionnaire.

May 27, 2016 – Charter fee/ Intro pricing date.

November 2016 – Project Report available.

 

Strategic Questions

  • Size the home equity market and evaluate trends in a changing environment.
  • Assess the impact of the housing and credit markets on consumer behavior.
  • Determine provider selection factors and measure satisfaction with current and/or past equity loan providers.
  • Identify key target markets.
  • Monitor the changing mix of marketing and distribution channels used for home equity lending.
  • Evaluate product features, new product concepts, and pricing structures.
  • Examine the consumer decision making process regarding home equity credit and competing credit products.
  • Identify strategies for acquisition, activation, retention, and remarketing.

MORTGAGE MARKET MONITOR 2016 (Apr 2016)

Decision Making and Application Process

Sources of Information and Advice; Education

Relationship Acquisition and Expansion

Key Finding from the Report:

Findings from SYNERGISTICS 2015 Home Equity Lending Monitor reveal that eight in ten homeowners report having a first mortgage. Incidence of first mortgages is found to be highly correlated with age declining as age increases.

Prop graphic

Highlights of the Study

Since 2001, SYNERGISTICS has conducted its annual Home Equity Lending Monitor and based on client feedback has decided to launch an annual examination of the mortgage market.  The 2016 inaugural edition of the Mortgage Market Monitor is being conducted to track and measure the many aspects of the consumer mortgage shopping and decision process.  The Monitor features a series of multiphase research elements including a targeted background research, an extensive national consumer survey, a management presentation, and a strategically oriented project report.  This annual monitor will benefit the entire mortgage market team including market research, product management, database marketing, communications and advertising, and risk management.

 

National Online Survey – 1,500 total interviews with financial decision makers age 18+ with a particular focus on current homeowners and buyers entering the market.

Key Dates

January 29, 2016 – Charter fee/Intro pricing ends.

January 29, 2016 – Final acceptance of comments on questionnaire.

April 2016 – Project Report available.

Strategic Objectives

  • Size the mortgage market and evaluate trends in a changing environment.
  • Examine the consumer decision making process and sources of information and advice regarding the mortgage market.
  • Identify strategies for acquisition, expansion, and retention.
  • Determine provider selection factors and measure satisfaction with current and/or past mortgage loan providers.
  • Assess the impact of the housing and credit markets on consumer behavior.
  • Identify key target markets.
  • Monitor the ongoing impact of refinancing.
  • Evaluate the role of new channels such as mobile phones, tablets, and other devices.