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 1st 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?