Mortgage & Nonmortgage Loan Brokers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 9,400 mortgage and nonmortgage loan brokers in the US facilitate loans by connecting borrowers and lenders for a fee. Residential mortgage loans account for 75% of industry sales. Other sources of revenue include brokering and dealing services for debt instruments and loans to businesses.
Competition from Alternative Service Providers
Loan brokers compete with a variety of alternative sources, including direct lenders, online-only disruptors, and (for mortgage loan brokers) real estate companies.
Government Regulation
In the wake of the last recession and housing crisis, increased regulation in the mortgage lending industry has led to higher costs and limitations on fees and pricing.
Industry size & Structure
The average mortgage or nonmortgage loan broker operates out of a single location, employs about 13 workers, and generates about $1-2 million annually.
- The mortgage and nonmortgage loan brokerage industry consists of about 9,400 firms that employ over 123,000 workers and generate about $13.4 billion annually.
- The industry is concentrated; the top 50 companies account for about 54% of industry revenue.
- C2 Financial Corporation is one of the largest mortgage broker companies and operates in ten states.
- According to the Consumer Financial Protection Bureau, mortgage brokers account for 63% of origination volume.
Industry Forecast
Mortgage & Nonmortgage Loan Brokers Industry Growth
Recent Developments
Nov 14, 2024 - Mortgage Rates may Be Volatile For Remainder Of 2024
- Mortgage brokers expect bond yields, and thus mortgage rates, to be volatile in the immediate aftermath of the election, according to Yahoo Finance. Michael Steller, a mortgage broker at Barrett Financial Group, said that he expects mortgage rates to stay between 5.75% and 6.5% for a while, provided the economy stays strong. The Mortgage Bankers Association and Realtor.com both expect rates to end the year around 6.3% but warn the path down could be choppy.
- Consumers who choose mortgage brokers over nonbank retail lenders can save an average of $10,662 over the life of their loan, according to a study conducted by Polygon Research and backed by Willow Canyon Advisors and United Wholesale Mortgage. The study also found that borrowers in the wholesale channel paid less upfront in 2023, a year marked by notably high interest rates. Specifically, those in the wholesale channel paid an average of 115 basis points to secure a 6.58% interest rate, compared to 148 basis points for a 6.60% rate through nonbank retail lenders.
- Smaller nonbank mortgage lenders are exiting the market due to a challenging environment of low origination volume and pressured gain-on-sale margins, according to Fitch Ratings. Employment in the non-bank mortgage industry has decreased 35% compared to peak levels in 2021, according to the Bureau of Labor Statistics. Scaled lenders, equipped with strong franchises and cost-saving initiatives, have weathered the storm more effectively, according to Fitch. "Continued consolidation will further benefit the largest originators, which have strengthened their franchises and will be able to take advantage of their competitive positions once origination volumes resume," the rating agency's researchers said.
- Mortgage and nonmortgage loan broker industry employment increased slightly while average wages for nonsupervisory employees increased significantly during the first nine months of 2024, according to the US Bureau of Labor Statistics. Loan broker sales are forecast to increase at a 1.57% compounded annual rate from 2024 to 2028, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc.
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