Mortgage Volumes Decline! But, Big Banks Market Share Increases

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Despite the fact that many big banks have recently scaled back their mortgage lending, the overall share of mortgage originations done by the top banks increased in the 1^st quarter of 2017.

With overall volumes declining, this means that these banks are grabbing a bigger piece of a shrinking pie.

Unfortunately, total originations declined by 36% in the first quarter to about $361 billion. The 5 largest banks originated about $111 billion, increasing their combined market share from 25% in the prior quarter to 31%.

Nonbanks, who thrived since the problems of 2008, now see their stronghold slipping as overall mortgage volumes decline.

According to studies done at some of the nation’s top business schools, US Banks are paying a large price for failing to implement new technology to streamline their mortgage processes. By doing so, they could actually do better.

A recent J.D. Power study found that only 18% of consumers getting loans from banks utilized online applications, while 31% of those applying with a nonbank used such systems. Mortgage applicants are becoming much more tech savvy and want to work with lenders that can offer this on line technology.

Presently through the use of online technologies, nonbanks are able to better service their customers providing quicker, more transparent approvals, and they are charging higher rates in return for these services.

This is a double whammy for the banks. They not only lose the business but what they are left to originate is done at slimmer margins.

However, nonbank lenders need to beware. As banks begin to see the big picture they are working to improve their loan origination technology.

In doing so, they will be in a much better position to continue to improve their market share of mortgage originations and doing so at better margins.

In the end, there are just so many customers out there in need of mortgage financing. To compete, any lender must have a good mix of products, great pricing, experienced LO’s, support staff, and the current technology to support them all.

Today’s consumers know that they want and they want it fast, with good service. Can you compete?

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.