Experian Consumer Homebuying Survey 2016

1

EDELMAN

Experian Home BuyingSurvey Report

March 2016

2 Intelligent Engagement© Copyright 2016 Daniel J Edelman Inc.

WHO HOW MANY ACCURACY WHEN HOW

Home Buyers(Purchased

within the past year or plan to purchase in the

next year)

n=500(250 Recent, 250 Future

Home Buyers)

Margin of Error =

± 4.4%

(± 6.2% for each audience)

Data Collection Occurred

February 19-24, 2016

Online Survey

RESEARCH OBJECTIVE: To garner media-genic research around home buyers’ attitudes toward credit scores,

financial responsibility and the purchase process

Research Methodology


Key Findings

Home buyers appreciate

the importance of

credit, and they consider it a “valuable tool” rather

than a “necessary

evil” for major

purchases.

One in five homebuyers is likely to

“opt out” of home

ownership in the next 5-10 years, driven

by a desire for more

flexibility or to carry less

debt.

First-time future home buyers are especially

worried about their credit, but many do

not know what steps

they can take to qualify for a better home

loan.

Recent home buyers are

more aware of the value of credit – and

monitor their credit more often – after

going through the home

buying process.

OVERALL RESULTS


Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree)Q7a: Which of the following statements comes closest to your opinion... Credit is a VALUABLE TOOL or a NECESSARY EVIL for making major purchasesQ8: In your opinion, how important is one’s credit score in purchasing a home? (Shown: Top 2 Box, Important)

Buyers recognize that credit plays a critical role in purchasing a home and qualifying for home loans

93%Say that one’s credit score is important in purchasing a

home

74%See credit as a

“valuable tool,” not a

“necessary evil” for making major purchases

48%Are working to improve their

credit to qualify for a better home

loan rate

See Credit as aVALUABLE TOOL

Working to IMPROVE CREDIT

54% ofFUTUREBUYERS

Credit Impact onHOME BUYING

90% Men vs.95% Women


Q13b: Have you ever been denied for a home loan for any of the following reasons?Q13c: Has your credit score ever negatively impacted your ability to get a home loan?

Poor credit historyOutstanding debt

Limited credit historyInsufficient incomeInsufficient assets

Employment issuesUnable to verify income

A spouse’s poor credit historyA spouse’s limited credit history

Unable to verify assets

16%12%

10%10%

7%5%5%4%

4%3%

Reasons for Being Denied a Home Loan

Poor credit history is the top reason why home buyers report getting denied for a home loan

19% SAY THAT THEIR OWN CREDIT SCORE has negatively impacted their ability to get a home loan8% SAY THATA SPOUSE’S CREDIT SCORE has negatively impacted their ability to get a home loan

15% Ages 18-34

8% Ages 18-349% Men


39% 40%

61%

41%

26%

73%

24%17%

72%

Home Buyer Perceptions by Age

Ages 18-34 Ages 35-54 Ages 55+

Younger home buyers’ purchasing is more limited by the types of loans that they are able to qualify for

Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree)


I was / am worried my credit sta-tus might hurt my ability to pur-

chase a home

I am concerned that my credit score doesn’t qualify for the best

home loan rate

I felt / feel prepared financially to purchase a home

34% 32%

72%

43% 47% 50%

Impact of Knowing Credit Score on Home Buyer Per-ceptions

Know Credit Score Do Not Know Credit Score

Knowing one’s credit score remains important to building confidence during the home buying process

Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Shown among those who know their credit score, n=388 and those who do not n=70)


Q4: Within the past year, have you passed any of the following life milestones? (Shown: Among Total, n=500)Q5: And in the next 12 months, do you plan to pass any of the following life milestones? (Shown: Among Total, n=500))

Buyers also recognize the impact of credit when refinancing a home

65%Agree their credit score affects the interest rate to

refinance a home

16%Have refinanced in the past year or plan to in the

year ahead

Credit Impact onREFINANCING

Recent / PlannedREFINANCING

21% of RECENT BUYERS

60% 1st Time Buyer vs.71% Experienced Buyer


Q14c. How likely are you to opt-out of home ownership in the next 5-10 years? Q14d: Which, if any, of the following reasons describe why you might opt-out of home ownership in the next 5-10 years? (Shown: Among those likely to opt out, n=97)

Some are already considering opting out of home ownership for more flexibility and to carry less debt

Want more flexibility to relocate

Do not want to carry as much debt

Want to invest in something else

Do not want the responsibility of maintaining a home

49%

36%

35%

26%

Reasons to Opt-Out of Homeownership

(Shown: Among those likely to opt-out in 5-10 years)19% of ALL HOME

BUYERS are likely to choose not to own a home

in the next 5-10 years

Opting Out ofHOME OWNERSHIP

24%Ages18-34

FUTURE HOME BUYERS’

EXPERIENCE


Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Among future buyers, n=250)

Future first-time buyers are especially concerned about their credit and its impact on their purchase ability

59% ofFUTURE BUYERSfeel financially

prepared to buy a home

34% of FUTURE BUYERSsay their credit might hurt their

ability to purchase a home

59% ofFUTURE BUYERS

are confident about their credit

status

Future BuyerCREDIT CONFIDENCE

Future BuyerPREPAREDNESS

Future BuyerCREDIT CONCERNS





Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Among future buyers, n=250)Q8: Which of the following activities are you MOST focused on to improve your credit? (Shown: Among those working to improve their credit, n=238)

Paying bills on time

Paying off debt

Keeping balances low on credit cards

Protecting credit info from fraud and identity theft

Not applying for / opening new credit accounts

68%

60%

28%

15%

11%

Future Buyer Credit Building Activities

(Shown: Top 2 Choices Among those working to

improve their Credit)

54%

of FUTURE BUYERS are working to improve their credit to qualify for a better home loan rate, but

35%

of FUTURE BUYERS say they do not know what steps to take to qualify for a larger loan

Some future buyers are working to build their credit, but many first-time buyers do not know how to start



Q6: Have you already been pre-approved for a loan for your next home purchase? (Shown: Among future buyers, n=250)Q7: To what extent do you agree or disagree with the following statements? (Shown: Top 2 Box, Agree; Among future buyers, n=250)

Many future buyers have delayed a purchase to improve their credit, and most are not pre-approved

Future BuyerLOAN PRE-APPROVAL

Future BuyerPURCHASE DELAY

Future BuyerLOAN RATE CONCERNS

38% ofFUTURE BUYERSare concerned

their credit score doesn’t qualify

for the best home loan rate

45% ofFUTURE BUYERS

delayed a purchase to

improve their credit to get

better interest rates

76%Not Pre-approve

d



RECENT HOME BUYERS’

EXPERIENCE


54%My credit score was HIGHER than I expected

58%I felt MORE CONFIDENT in my understanding of the kind of loan I was eligible for

18%My credit score was LOWER than I expected

25%I was SURPRISED by my credit score

Q10: Did you, yourself, check your credit report or credit score at any point in the home buying process? (Asked of recent buyers, n=250)Q12: Which of the following, if any, applied to you? (Shown: Among recent buyers who checked their credit score in the process of purchasing a home, n=197)Q13A: After learning your credit score, were you more or less confident in your understanding of what kind of home loan you would be eligible for? (Shown: Among recent buyers who checked their credit score in the process of purchasing a home, n=197)

Recent home buyers that checked their credit score felt more confident after doing so

Recent BuyerCREDIT CHECKING Credit Reactions

(Shown: Among those that checked their credit)

51%

28%21%

When first considered purchasingLater

NET 79% of RECENT

BUYERSchecked their

credit37%

Ages 55+


Q13d: After purchasing a home, do you consider access to credit to be more valuable or less valuable than you did before you had purchased a home? (Asked of recent home buyers, n=250)Q13e: And how, if at all, has purchasing a home affected how you use credit? (Asked of recent home buyers n=250)

After purchasing, homeowners become more cognizant of their credit

I monitor my credit more often

I am wary of taking on more debt

I use credit cards less often

I use fewer credit cards / cancelled a credit card

I enrolled in a credit monitoring service

38%

29%

24%

16%

16%

NET 72%HOME

BUYING HAS HAD

AN IMPACT ON CREDIT

USAGE BEHAVIORS_____________NET 81%

AGES 18-34

Recent BuyerIMPACT ON CREDIT PERCEPTIONS

Recent BuyerIMPACT ON CREDIT BEHAVIORS

60%

36%

4%

More valuable No impactLess valuable


Difficulty securing a loan Difficulty getting a good interest rate

Difficulty getting a loan large enough to suit

one's needs

Requiring a co-signer

76% 82%72% 68%73%

62% 56% 54%

Recent Home Buyer Impact Perceptions

Poor Credit Identity Fraud

Q9: In which of the following ways do you think having a poor credit status could affect a potential home buyer? (Shown: Among recent buyers, n=250)Q13: In which of the following ways do you think a victim of identify fraud could be affected when buying a home? (Shown: Among recent buyers, n=250)

Recent buyers recognize the impact of poor credit, but fewer understand the effects of identity fraud

-20 -16 -14

Difficulty securing a loan Difficulty getting a good interest rate

Difficulty getting a loan large enough to suit

one's needs

Requiring a co-signer

APPENDIX


Category Subcategory %

Home Purchase

Future Buyer 50%Recent Buyer 50%

GenderMale 43%

Female 57%

Age18-34 41%35-54 34%55+ 25%

Region

Northeast 27%South 27%West 20%

Midwest 26%

Race / Ethnicity

White 81%African American 6%

Hispanic 6%Asian American 4%

Other 3%

Category Subcategory %

Know Credit ScoreYes 78%No 14%

Unsure 8%

Credit Score

Exceptional 21%Very Good 31%

Good 18%Average 17%

Poor 12%

Education

HS or less 14%Some college 31%

College graduate 37%Graduate school 17%

Household Income

<$25K 10%$25K-<$50K 26%$50K-<$75K 29%

$75K-<$100K 15%$100K+ 17%

Demographics

Respondent Demographics

Totals may not add up to 100 due to rounding

Thank you

Experian Consumer Homebuying Survey 2016

Economy & Finance

Transcript of Experian Consumer Homebuying Survey 2016