Mortgage Banking Industry Profile

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 UK), BNP Paribas (France), and Deutsche Bank and Postbank (both based in Germany).

The 30-year mortgage rate is expected to average 7% in 2024, according to Bankrate. 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.

COMPETITIVE LANDSCAPE

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 50 largest companies generate about 70% of revenue.

Innovations such as Rocket Mortgage, Quicken Loans' fully online mortgage application ...