Few dispute the usefulness of the Internet for finding information about mortgages and related subjects. Similarly, few dispute the fact that the Internet is an excellent source to compare rates and terms for different lenders. Given these statements, many have searched for an explanation of why only a small fraction of mortgages are actually purchased online.

Many people have written this off as a consequence of the psychological barriers to purchasing online. They believe consumers are particularly reluctant to engage in such a large and important transaction as a home loan online.

Note, though, that a recent study by Foolproof, an online consultancy firm, has found this may not be the case. The study shows that almost half of those in the market for a mortgage would like to research online, while almost a full third (thirty percent) say they would like to apply online for a loan.

It appears, Foolproof suggests, that the factor stopping many of these consumers from actually buying online is the experience of online searching. The first pitfall commonly encountered in this area is getting past the search engine results. For example, if you type “cheap mortgages” into Google, many of the first sites that appear aren’t relevant to the common browsing consumer. There is a glut of mortgage directory sites within these results, often lacking any quality control. Consumers don’t trust these sites’ recommendations, and they may give up on the online process entirely.

Another problem is the high number of sites aimed at those with poor credit, seeking a sub-prime loan. These loans have high profit margins, but are inappropriate for the majority of consumers looking for a mortgage online.

The best comprehensive sites have difficulty placing high on search engines because they have to provide lots of unrelated content on the other services they offer (credit cards, for example), and will often be edged out by smaller broker or directory sites.

This is particularly important because the study also finds that consumers hardly ever move past the first page of search engine listings. This results in many useful sites not being viewed.