Two-Thirds of US Adults Believe Current Mortgage Product Advertising and Marketing Lacks Credibility

ROCHESTER, N.Y.--(BUSINESS WIRE)--Given all the negativity surrounding the sub-prime mortgage marketplace, it is no surprise that consumers have questioned the credibility of the current marketing and advertising for mortgage products. Just one-third of US adults (34%) view the advertising and marketing of mortgage products as credible, with the majority (66%) viewing it as not credible. In fact, one in five adults (22%) report that they view the advertising and marketing of these products as ‘not at all credible.’

“The data further emphasize why a ‘one size fits all’ approach is not effective in terms of the messaging used to inform and educate consumers about mortgage offerings. This is especially true when communicating to different ethnic groups.”

These are some of the results of a Harris Poll of 2,383 U.S. adults conducted online between May 8 and 14, 2007 by Harris Interactive®.

These numbers have significant implications for the type of trust the American public has in financial institutions. When probed further about their perceptions of the financial institutions that provide mortgages, only one-quarter (27%) of U.S. adults report favorable perceptions, with just three percent saying their perceptions are very favorable. “Given the large proportion of consumers who are riding the fence, now more than ever would be a good time for these institutions to examine their mortgage product advertising and marketing messages,” says Sanford Brumley, Vice President of Client Development for the Harris Interactive Financial Services Group.

The study highlights that advertising favorability does not always equate to favorability towards the institution offering the mortgage products. For example, African Americans are more inclined than Whites or Hispanics to view marketing/advertising for mortgages as credible (44% vs. 33% and 34% respectively). At the same time, however, they exhibit the most negative sentiment toward institutions providing these mortgage products, as one-third (37%) of African Americans have an unfavorable opinion compared to one-quarter (26%) of Whites and one-third (30 %) of Hispanics.

According to Natalie Jobity, Vice President of Research for the Harris Interactive Financial Services Group, “The data further emphasize why a ‘one size fits all’ approach is not effective in terms of the messaging used to inform and educate consumers about mortgage offerings. This is especially true when communicating to different ethnic groups.”

Perceptions about Mortgage Products

The overall sentiment towards various mortgage options is generally unfavorable, with one major exception: fixed rate mortgages have the highest level of favorability with 71 percent of those who are aware of the product reporting that they feel favorable about them. Over half (52%) feel favorably towards home equity loans, but even so, just 15 percent of them say they feel very favorable towards it.

Among the other options, one quarter of adults have a favorable impression about no/low down payment (27%) as well as reverse mortgages (25%). Over half feel unfavorably towards Adjustable Rate Mortgages (ARMs; 53%), while at least three in five feel unfavorably towards interest only mortgages (60%) and balloon mortgages (68%).

Consumer Awareness and Knowledge

Consumer awareness of mortgage products is high with over seven in ten being aware of Home Equity loans (78%), ARMs (74%), fixed rate mortgages (72%) and no/low down payment options (71%). Even among the newer mortgage products available awareness is high with six in ten consumers reporting familiarity with balloon (64%), reverse (64%) and interest only (63%) mortgage options. Additionally, older adults are significantly more aware of the various mortgage products than their younger cohorts.

Consumer knowledge of fixed rate mortgages and home equity loans is the highest among the different mortgage options. Among those who are aware of the products, two-thirds (68%) are knowledgeable about fixed rate mortgages and 65 percent are knowledgeable about home equity loans. Over half of consumers report being knowledgeable about ARMs (58%), Balloon (52%) and Interest only (52%) offerings. Just half say they are knowledgeable about no/low down payment and reverse mortgages (49% for each). Other interesting highlights include:

When it comes to balloon and no/low down options, African Americans and Hispanics report being more knowledgeable about no/low down payment and balloon options than Whites. Two-thirds of African Americans (65% for each) say they are knowledgeable about both, while two-thirds of Hispanics are knowledgeable about balloon mortgages and 60 percent are knowledgeable about no/low down options. Just half of Whites (49%) are knowledgeable about balloon mortgages while 45 percent are knowledgeable about no/low down mortgages;
Hispanics are most knowledgeable about interest only mortgages with two-thirds (65%) saying they are knowledgeable compared to 55 percent of African Americans and half of Whites;
Older generations and men are typically more knowledgeable than younger generations and women about the various mortgage options.

Usage of Products

Given consumers’ high awareness and knowledge about mortgage options, however, ownership of these mortgage products is low. Over half of consumers (54%) do not own any mortgage product, just one-third (33%) own a traditional fixed rate mortgage and 16 percent have a home equity loan. Ownership drops significantly for all the other types of mortgage offerings with less than one in ten consumers owning offerings like ARMs (7%), interest only (5%), no/low down payment (4%), balloon (2%), and reverse (2%). Looking at generation, two in five Gen Xers (42%) and Baby Boomers (43%) have a fixed rate mortgage compared to 15 percent of Echo Boomers and 27 percent of Matures. Four out of five Echo Boomers (79%) have none of these products.

TABLE 1

CREDIBILITY OF MORTGAGE ADVERTISING

“In general, how credible do you feel the advertising and marketing of mortgage products is?”

Base: All adults

	Total	Race
	Total	White	Black	Hispanic
	%	%	%	%
TOTAL CREDIBLE (NET)	34	34	44	33
Very credible	2	2	6	-
Somewhat credible	33	32	38	33
TOTAL NOT CREDIBLE (NET)	66	66	56	67
Just slightly credible	43	44	37	44
Not at all credible	22	22	19	23

Note: Percentages may not add up to exactly 100% due to rounding

“-“ Indicates no response

TABLE 2

PERCEPTIONS OF THOSE WHO PROVIDE MORTGAGES

“Thinking about banks and other financial institutions who provide mortgages, what are your overall perceptions?”

Base: All adults

	Total	Race
	Total	White	Black	Hispanic
	%	%	%	%
TOTAL FAVORABLE (NET)	27	28	25	27
Very favorable	3	3	5	*
Somewhat favorable	24	25	20	27
Neither favorable or unfavorable	45	47	38	43
TOTAL UNFAVORABLE (NET)	28	26	37	30
Somewhat unfavorable	20	19	24	20
Very unfavorable	8	7	14	10

Note: Percentages may not add up to exactly 100% due to rounding

*Less than 0.5%

TABLE 3

AWARENESS OF MORTGAGE PRODUCTS

“Which of the following products are you aware of?”

Base: All adults

	Total	Generation
	Total	Echo Boomers (18-30)	Generation X (31-42)	Baby Boomers (43-61)	Matures (62+)
	%	%	%	%	%
Home Equity Loan	78	66	74	84	83
ARM (Adjustable Rate Mortgage)	74	56	75	82	79
Fixed Rate Mortgage (15 or 30 year)	72	61	66	76	84
No/Low Down Payment Mortgage	71	58	68	77	77
Balloon Mortgage	64	35	62	79	77
Reverse Mortgage	64	36	60	72	86
Interest Only Mortgage	63	45	62	70	74
None of these	14	26	15	9	6

Note: Multiple Response Question

TABLE 4

IMPRESSIONS OF MORTGAGE PRODUCTS

“Based on everything you may have seen, heard or read, and/or your own experience, what are your impressions of each product below?”

Base: Those who are aware of product

	Total Favorable (NET)	Very Favorable	Somewhat favorable	Neither Favorable or Unfavorable	Total unfavorable (NET)	Somewhat unfavorable	Very unfavorable
	%	%	%	%	%	%	%
Fixed rate mortgage (15 or 30 year)	71	40	31	25	4	2	2
Home equity loan	52	15	37	36	12	7	5
No/Low down Payment mortgage	27	7	20	39	33	19	15
Reverse mortgage	25	5	20	39	36	17	18
ARM (Adjustable Rate Mortgage)	14	1	13	32	53	30	24
Interest only Mortgage	9	1	8	31	60	23	38
Balloon Mortgage	4	*	3	29	68	24	49

Note: Percentages may not add up to exactly 100% due to rounding.

*Less than 0.5%

TABLE 5

UNDERSTANDING OF MORTGAGE PRODUCTS

“Please rate your level of understanding about each product.”

Base: Those who are aware of product

	Total Knowledgeable (NET)	Very Knowledgeable	Somewhat Knowledgeable	Total Not Knowledgeable (NET)	Slightly Knowledgeable	Not at all Knowledgeable
	%	%	%	%	%	%
Fixed rate mortgage (15 or 30 year)	68	37	31	32	21	10
Home equity loan	65	28	36	35	24	11
ARM (Adjustable Rate Mortgage)	58	22	36	42	27	15
Balloon Mortgage	52	19	33	48	29	18
Interest only Mortgage	52	18	34	48	30	19
No/Low down Payment mortgage	49	17	31	51	34	18
Reverse mortgage	49	15	34	51	33	19

Note: Percentages may not add up to exactly 100% due to rounding.

TABLE 6

UNDERSTANDING OF MORTGAGE PRODUCTS – BY GENDER AND RACE

“Please rate your level of understanding about each product?”

Those saying “Very/Somewhat Knowledgeable”

Base: Aware of product

	Total	Gender		Race
	Total	Male	Female	White	Black	Hispanic
	%	%	%	%	%	%
Fixed Rate Mortgage (15 or 30 year)	68	72	64	68	77	66
Home Equity Loan	65	70	60	64	68	72
ARM (Adjustable Rate Mortgage)	58	67	50	56	64	71
Balloon Mortgage	52	58	47	49	65	65
Interest Only Mortgage	52	58	45	50	55	65
No/Low Down Payment Mortgage	49	54	43	45	65	60
Reverse Mortgage	49	55	43	49	50	51

Note: Percentages may not add up to exactly 100% due to rounding

TABLE 7

UNDERSTANDING OF MORTGAGE PRODUCTS – BY GENERATION

“Please rate your level of understanding about each product?”

Those saying “Very/Somewhat Knowledgeable”

Base: Aware of product

	Total	Generation
	Total	Echo Boomers (18-30)	Gen X (31-42)	Baby Boomers (43-61)	Matures (62+)
	%	%	%	%	%
Fixed Rate Mortgage (15 or 30 year)	68	43	70	75	77
Home Equity Loan	65	37	60	73	79
ARM (Adjustable Rate Mortgage)	58	40	52	67	63
Balloon Mortgage	52	33	44	59	58
Interest Only Mortgage	52	38	51	57	54
No/Low Down Payment Mortgage	49	31	47	55	54
Reverse Mortgage	49	31	37	50	64

Note: Percentages may not add up to exactly 100% due to rounding

TABLE 8

MORTGAGE PRODUCTS USED

“Which of the following products do you have?”

Base: All adults

	Total	Generation
	Total	Echo Boomers (18-30)	Gen X (31-42)	Baby Boomers (43-61)	Matures (62+)
	%	%	%	%	%
Fixed Rate Mortgage (15 or 30 year)	33	15	42	43	27
Home Equity Loan	16	5	16	20	21
ARM (Adjustable Rate Mortgage)	7	4	6	8	7
Interest Only Mortgage	5	3	6	6	4
No/Low Down Payment Mortgage	4	2	7	5	2
Balloon Mortgage	2	2	2	2	3
Reverse Mortgage	2	1	1	2	2
None of these	54	79	47	42	54

Note: Percentages may not add up to exactly 100% due to rounding

Methodology

This Harris Poll^® was conducted online within the United States between May 8 and 14, 2007, among 2,383 adults (aged 18 and over). Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in Harris Interactive surveys. The data have been weighted to reflect the composition of the adult population. Because the sample is based on those who agreed to participate in the Harris Interactive panel, no estimates of theoretical sampling error can be calculated.

These statements conform to the principles of disclosure of the National Council on Public Polls.

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Q805, 810, 815, 820, 825

About the Financial Services Group:

The Harris Interactive Financial Services Research Practice combines expertise in finance and market research to provide companies in the financial services industry with the critical knowledge they need to make sound, strategic business decisions. Our research focuses on retail and commercial banking and payment systems, mortgage and real estate, insurance, and investments and securities, with particular emphasis on the critical issues impacting the industry. Our practice specializes in accessing the hard-to-reach audiences that are crucial to the business of most financial services firms, including the affluent, benefits administrators, small business owners, senior executives, and financial advisors. The Financial Services Research Practice gives financial services firms a clear understanding of how their key stakeholders make decisions, giving them the confidence to implement strategies that will build their business.

About Harris Interactive

Harris Interactive is the 12^th largest and fastest-growing market research firm in the world. The company provides innovative research, insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. The company has built what it believes to be the world’s largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at www.harrisinteractive.com.

To become a member of the Harris Poll Online and be invited to participate in online surveys, register at www.harrispollonline.com.

The Harris Poll ®#70, July 16, 2007

By Natalie Jobity, VP Research, Financial Services Group, Harris Interactive