Companies in this industry lend money with real estate as collateral. Major companies based in the US include units of Bank of America, JPMorgan Chase, Rocket Mortgage, and Wells Fargo; other major companies include units of Barclays and Nationwide Building Society (both based in the US), BNP Paribas (France), and Deutsche Bank and Postbank (both based in Germany).
The 30-year mortgage rate is expected to average 3.075% in 2021, down from 3.125% in 2020, according to an average of forecasts from Fannie Mae, Freddie Mac, the National Association of Realtors and the Mortgage Bankers Association. The use of mortgages to buy homes is most common in wealthy, developed countries where consumer income is healthy and legal and regulatory infrastructure is well established. Mortgage practices and rules vary. In many countries the government helps people buy houses through beneficial tax policies, but few governments purchase mortgages to provide security, as the US does.
The US mortgage banking industry includes about 15,000 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $91 billion.
Demand for mortgage services is driven by home sales and the refinancing that occurs when mortgage rates are low. The profitability of individual companies depends on volume, interest rate spreads, and efficient operations. Large companies have big economies of scale in operations. Small companies compete successfully by funneling mortgages to the large companies. The US industry is concentrated: the eight largest companies generate about 40% of revenue.
Innovations such as Rocket Mortgage, Quicken Loans' fully online mortgage application process, are disrupting the industry's traditional business model. As more aspects of the home buying process migrate online, tech-focused startups and peer-to-peer nonbank lenders such as Social Finance, LendingHome, and loanDepot are siphoning business away from the mortgage industry giants.
Before the subprime lending crisis of the late 2000s, independent mortgage lenders were more prominent among the US industry's leaders. Failure of some of the largest of those companies and the dispersal of their assets led to the emergence of top-tier banks as dominant players in the industry.
Products, Operations & Technology
Mortgage banks lend money to homeowners with the home as collateral; some specialize in lending to farms or businesses, also with real estate as colla
Sales & Marketing
Finance & Regulation
Regional & International Issues
Also includes the following chapters:
Quarterly Industry Update
Trends and Opportunities
Call Preparation Questions
Glossary of Acronyms