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, and Wells Fargo, as well as Quicken Loans; other major companies include units of Barclays Bank (UK), BNP Paribas (France), Deutsche Bank, Postbank (Germany), and Nationwide Building Society (UK).
Real credit growth, often associated with housing price changes, was strong in many countries in 2018, according to Haver Analytics and the International Monetary Fund. China and India were among the countries with the largest annual percent growth during the period. 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 14,700 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $105 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 50% 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. In the decade since the financial crisis, nonbank mortgage companies have played a crucial role in maintaining access to mortgage credit, originating about half of all mortgages in 2016, up from 20% in 2007, according to a study by the Brookings Institution.
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