Source: Housing Wire —
Mortgage industry participants may disagree a great deal on several different topics. However, I expect that you would find no argument with the following statement: Mortgage lending is a highly competitive business.
While the scope of the market, which totaled roughly $4 trillion in volume each of the past two years, might suggest abundant opportunities, loan officers and companies need to stay on their toes to survive, let alone thrive in this environment.
Make no mistake: the mortgage market has become more competitive.
There are multiple different ways to measure the level of competition within an industry. First, simply look at the number of competitors. 2020 Home Mortgage Disclosure Act (HMDA) data showed that more than 4,300 lenders originated enough mortgages to meet the disclosure requirement, while many more lenders likely originated just a few loans that year.
These lenders included banks, credit unions, and independent mortgage banks (IMBs), all offering a similar product to millions of potential customers across the country through retail, wholesale, and consumer direct channels. Consumers can instantly compare mortgage products and rate offerings online either through lender websites directly or through the various websites that offer comparison shopping.
Some might argue that even though there are many potential competitors vying for a consumer’s loan, if there are certain competitors who dominate market share persistently over time, one could get a false perception regarding the intensity of competition.
Are there lenders who have persistently dominated the mortgage market? Exhibit 1 shows lender rankings from MBA analysis of HMDA data over the past 20 years, in this case showing the top 20 lenders by retail and broker volume at four points over this time period. Lenders in bold were in the Top 20 in 2005 and in these successive years.
Clearly, the impact of the Great Financial Crisis (GFC) mattered, as there were a large number of failures and an extraordinary number of mergers and acquisitions among both banks and IMBs. Regardless, aside from the three largest banks in the country, it certainly looks difficult to remain at the top of the industry in terms of volume.
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