DALLAS—Consumers’ sense of obligation to the mortgage contract remains strong, according to the results of a market research survey conducted last summer on behalf of Wells Fargo Home Mortgage.
Lisa Zakrajsek, head of marketing at Wells Fargo Home Mortgage, presented that finding and others in a speech during the SourceMedia Mortgage Servicing Conference here last month.
“While it’s difficult to see in today’s complexity, consumers’ sense of obligation to the mortgage contract has not gone away,” Zakrajsek said.
Survey respondents were asked whether they agreed or disagreed now and three years ago with the statement: “A contract is a contract and people should be held responsible for paying their mortgage based on the terms they agreed to with the bank.”
Sharing their current opinions, 57% of respondents agreed, 30% didn’t know and 11% disagreed. When asked how they would have answered the question three years ago, 58% agreed, 32% didn’t know and 11% disagreed.
Breaking the current opinions down by homeowners with equity and who are underwater, 62% agreed, 30% didn’t know and 8% disagreed. Among underwater borrowers, 51% agreed, 35% didn’t know and 14% disagreed.
“Has our moral fiber decreased as a result of this crisis?” Zakrajsek asked. “I would say the answer is no.”
In addition to their sense of obligation to pay, the majority of respondents still believe buying a home is a good investment and part of the American dream.
In all, 86% said that homeownership is part of the American dream.
Additionally, more than 80% of borrowers with equity agreed that a home is one’s most important financial asset and compared to other investments, owning a home is still a smart investment.
Among underwater borrowers, the rates of respondents who agreed with the statement were about five percentage points less than borrowers with equity, but still above 75%.
“Nobody has given up or dropped the dream of homeownership,” Zakrajsek said.
Looking forward to new generations of borrowers, Zakrajsek said the emerging Millennial Generation represents the largest first-time homebuyer population in the history of the United States.
This population is more ethnically diverse than previous generations and more technologically savvy.
Contrary to expectations, Zakrajsek said the Millennial Generation did not display a profound push toward urban living over suburban living. However, respondents said that living near friends on sociable environments was important to them.
“This is the Facebook generation; they’re used to being connected,” Zakrajsek said.
However, she warned that some of that mentality could be a factor of the generation being a younger age group, as opposed to the older baby boomers and Generation X responders, who put a greater premium on privacy.
The survey also found that environmentally conscious lifestyles and living in smaller houses were important to Millennials.
Those mentalities mirror similar feelings respondents said about their spending and saving habits. More than 70% of Millennials, baby boomers and Gen X-ers said sometimes they need to treat themselves to something nice or fun, even if that means tightening their budget in other places.
But Zakrajsek said both attitudinally and behaviorally, consumers appear to be shifting away from excess and toward balance.
“We are not returning to a Depression-era mentality, but we are seeing a shift in people toward a more responsible and balanced environment,” she said.
