Why Are Businesses Still Designing Customers Around Their Products?

Everyone is waiting for mortgage rates to come down. Maybe we’re waiting for the wrong thing.

High rates combined with high home prices have created a difficult environment for buyers. Sellers with low-rate mortgages have little incentive to move, while buyers are struggling to make today’s payments work. The obvious solution is lower rates.

But what if the problem isn’t just the rate? What if the product itself needs to change?

For decades, the traditional mortgage has served consumers remarkably well. Put money down, finance the balance and make payments for 15 or 30 years. It worked so well for so long that we stopped questioning the design.

Businesses do this all the time. A product serves the market for decades, and eventually the business starts designing the customer around the product instead of designing the product around the customer.

Why Isn't Waiting for Lower Mortgage Rates Enough?

High rates and home prices keep buyers out and low-rate sellers in place. The traditional 15- or 30-year mortgage went unquestioned for decades, the same way businesses end up designing customers around a product instead of the reverse.

The Customer Changed. The Product Didn’t.

The interesting part of today’s housing market is that there is money in the system. Many homeowners have accumulated significant equity. Some own their homes outright. Others have relatively small mortgage balances with interest rates they have little financial incentive to give up.

On the other side are potential buyers who may earn more than previous generations did in nominal dollars, yet still struggle to make the traditional mortgage equation work at current home prices and interest rates.

There is value on one side of the transaction and purchasing demand on the other. The problem is connecting the two in a way that makes economic sense.

Yet the basic solution remains remarkably familiar: take the purchase price, subtract the down payment and finance the rest at today’s interest rate. If the resulting payment doesn’t work, the consumer generally has a handful of choices. Buy less house, bring more money, wait for rates to fall or don’t buy.

Then we call it an affordability problem.

Maybe it’s also a product-design problem.

The current market creates some strange incentives. A homeowner may want to downsize but hesitate because giving up a low-rate mortgage could leave them with a surprisingly similar payment on a less expensive home. A growing family may want to move but stay because replacing their existing financing makes the next house dramatically more expensive. Meanwhile, the buyer who would gladly purchase that home is trying to qualify under an entirely different interest-rate environment.

The transaction doesn’t fail because nobody wants what the other person has. It can fail because the mechanism connecting them no longer works particularly well.

That should be interesting to financial institutions.

What if some financing became portable? What if lenders could create blended-rate structures that incorporated existing debt? Could sellers participate in financing more often? Could accumulated home equity play a larger role in helping children or grandchildren enter the housing market without simply requiring a large cash gift? Could shared-equity structures allow another party to participate in future appreciation in exchange for reducing the buyer’s upfront financing burden?

There are regulatory, underwriting and risk considerations behind every one of those ideas. I’m not suggesting one of them is the answer.

I’m suggesting the industry should be asking more questions.

Because innovation rarely starts by asking, “How do we sell more of what we already offer?” It starts by asking, “What is the customer actually trying to accomplish?”

How Could Mortgage Product Design Break the Housing Stalemate?

Homeowners hold equity and buyers hold demand, but the standard mortgage formula fails to connect them. Portable financing, blended-rate structures, seller financing, family equity and shared-equity models are all worth questioning, despite regulatory, underwriting and risk hurdles.

Why Customer Friction Signals a Product Design Problem

One of the biggest mistakes businesses make in customer experience is assuming friction is something the customer needs to overcome. Fill out another form. Follow our process. Call another department. Bring us more information. Put more money down.

Eventually, enough friction should force a business to ask a different question: Why was it designed this way in the first place?

That question requires more than changing a process. It requires clarity about what the customer is actually trying to accomplish, consistency in how the business helps them get there and ownership when the existing experience stops working.

Most importantly, it requires intentional design.

The mortgage industry provides an unusually visible example because the numbers are so large, but every industry eventually faces the same challenge. Are customers choosing our product because it remains the best solution, or because it’s simply the solution our industry has always offered?

Those are very different things.

What Does Customer Friction Reveal About Product Design?

Friction is feedback that a design has stopped working. Fixing it takes clarity on the customer's goal, consistency in helping them reach it, ownership of the broken experience and intentional design.

Rethinking the Mortgage as a Customer Experience Problem

Editor's note: The following table highlights the most important lessons, actions and strategic considerations emerging from the case for redesigning the mortgage around what homebuyers are trying to accomplish.

Key Area	What Happened	Why It Matters	Recommended Action
Housing stalemate	High rates and home prices stall buyers while low-rate sellers stay put	Lower rates alone may not restart transactions	Question the product's design instead of only waiting on rates
Product inertia	The traditional mortgage went unquestioned for decades	Businesses end up designing customers around the product	Design the product around what the customer is trying to accomplish
Disconnected value	Homeowners hold equity while buyers hold purchasing demand	The mechanism connecting them no longer works well	Explore portable financing, blended rates, seller financing, family equity and shared equity, weighing regulatory, underwriting and risk factors
Customer friction	Businesses treat friction as the customer's burden	Friction is feedback that the design has stopped working	Ask why the process was designed that way, with clarity, consistency, ownership and intentional design
Cheap-money cushion	Low rates let the traditional mortgage keep working	Higher rates removed that cushion	Create better ways to finance homeownership
Outcome vs. mechanism	Customers want affordable homes, not mortgages	Every industry risks protecting the mechanism over the outcome	Own the friction and design a better path to the customer's outcome

Maybe High Rates Force Better Design

High mortgage rates aren’t good for consumers. But the pressure they create might ultimately produce something good for them.

Cheap money made it easier for the traditional mortgage to continue working. When interest rates were extremely low, affordability could often be addressed through the monthly payment without fundamentally reconsidering the product itself. Lower rates allowed consumers to finance more expensive homes while keeping payments manageable.

Higher rates remove that cushion. If rates don’t quickly return to historic lows and home prices don’t dramatically fall, the industry has another option: create better ways to finance homeownership.

That’s where this stops being a mortgage story and becomes a customer experience story.

People don’t actually want mortgages. They want homes they can reasonably afford. A mortgage is simply the mechanism we’ve designed to help them get there. That distinction matters well beyond banking.

Customers don’t necessarily want your process, your technology, your policies or even your product. They choose you because they believe those things will help them accomplish something.

The danger begins when the organization becomes more committed to protecting the mechanism than delivering the outcome.

Great customer experiences aren’t created by making people better at navigating an outdated system. They’re created when businesses are clear about the outcome customers are seeking, take ownership of the friction standing in the way and intentionally design a better path to get there.

Maybe the housing market doesn’t need to return to the way it was. Maybe the pressure we’re experiencing now is exactly what forces someone to design what comes next.

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