An electronic-commerce analyst for Deustche Bank Securities of New York told the Wall Street Journal Thursday that he estimates that mortgages originated on-line last year account for less than 1% of all mortgages originated in 1998.

But that minuscule percentage, analyst James Marks says, is still a ten-figure dollar number -- about $4.2 billion.

And Internet Services, a San Jose, Calif. organization that monitors industry trends, gives a more liberal estimate -- a full 2.5%.

And while few analysts of any stripe expect that e-commerce will replace face-to-face transactions, many are saying they expect more people will see online mortgages as a convenient way to comparison shop and possibly get better deals.

Marks, meanwhile, predicted to the Journal that if the housing industry keeps burning as hot as it has and growth continues at its current pace, mortgages originated online could reach $60 billion in 2000.

Mortgage companies and industry analysts predict the number of mortgage applications filed online over the Internet will increase between 10 to 25 percent within the next five years.

A survey by California-based, Transamerica Intellitech -- which also provides data gathering for the California Association of Realtors® -- showed that of 1,000 California residents who refinanced their homes in the first quarter of this year, 63 percent used the Internet for their initial contact with a lender.

However, only 14 percent of the survey respondents completed the form there.

Most online lending companies are reluctant to discuss number of loans originated or revenues. But the head of leading lending service firm E-Loan said the industry's growth is also a function of the savings many online mortgage lenders can provide. "We estimate that we save each customer an average of $1500 on a loan," said E-Loan's CEO Chris Larsen. "That savings, along with the greater choice, and control over the process that E-LOAN offers, has been so compelling that consumers have responded at a rate far exceeding even our most optimistic projections."

Dianne Gibson, manager at Homeowner's Mortgage in Wichita, Kan., says that's because many people are still wary about the security of personal financial information transmitted via the Internet, despite reassurances about "secure" Internet sites from e-commerce experts.

"When you put that information out over the Internet, anybody can access it," she said. "Personally, I'm not for it."

While online mortgage application sites are being touted as a fast way to get mortgage approval, Gibson foresees delays ­ information entered online still has to be supported by other documentation, like pay stubs and other materials that can't be typed into a computer.

"I think there's still a lot to be said for a personal contact," Gibson said.

Published: February 5, 1999

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