Tendayi Kapfidze is Chief Economist at LendingTree. He leads the company’s analysis of the U.S. economy with a focus on housing and mortgage market trends. Tendayi utilizes data analysis to be a resource for both consumers and trade media, providing actionable insights to help consumers make informed financial decisions.
1) LendingTree’s latest Mortgage Comparison Shopping Report geographically measured potential savings for mortgage shoppers by state and city. What are some surprising findings you found from the analysis?
Nothing surprising in the analysis, rather, its surprising how little people take advantage of the opportunity to save by comparing rates. This is especially notable in purchase transactions. In a refinance, the goal is often more clearly to get a lower rate whereas for purchase, the mortgage is a secondary or complementary product to the house. Homebuyers pay less attraction to the rate and are more focused on getting approved and getting their offer for the house accepted.
2) Where do you see most LendingTree users comparison shop on your site – mortgage, auto, personal, etc? And what are the broader implications of consumer purchasing interests this past year based on those searches?
All consumers on our sites have the opportunity to comparison shop for the product they are seeking. Search volume in mortgage correlates well to interest rates, so lower interest rates have been driving volume recently. Other products have seasonality in the calendar year based on other economic factors. For example, auto loan and insurance picks up from February through March, this aligns with the tax season as many buyers utilize the refund for down payments. Students loans peak at the end of summer into early fall.
3) From understanding newlywed financial woes to the best places to live for singles, LendingTree seems to be tapped into the consumer fiscal mindset. Any trends you foresee this decade when it comes to consumer financial savviness?
There is growing awareness of the importance of financial literacy in general, which is a welcome trend. Governments, non-profits and the private sector are all increasing the resources available to consumers. Behavioral economics is adding insights that help overcome some of the psychological barriers to good personal financial management. So we anticipate improved consumer financial management for most consumers.
4) With a potential Recession looming this year, do you expect many consumers to re-finance their mortgages?
Refinances are booming given low interest rates. A recession can actually create more refinance opportunity as treasury rates, which drive mortgage rates, would fall. It’s important to note that a recession is not our base case expectation, but as the year has already shown with Iran and the coronavirus, we live in a risky world. An economy growing at just 2% can easily succumb to an exogenous shock.
5) Unlike other credit monitoring apps, the LendingTree Mobile app has a holistic approach to helping consumers grasp their long-term financial health by taking into account other factors such as savings, DTI, budget, etc. Why do you think it’s important to take into account more than just your credit score when it comes to financial planning?
A credit score is just one aspect of financial health. People with the same score can have vastly different incomes, assets and liabilities. Financial security is about having a holistic view of your financial profile and making a comprehensive plan to stay on track for your personal and life goals. Ultimately, its about peace of mind and we believe our app, by keeping track of a multitude of relevant financial metrics and suggesting areas of improvement, is a valuable tool in everyone’s personal finance arsenal.