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 8,200 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 14-15 workers, and generates about $2-3 million annually.

    • The mortgage and nonmortgage loan brokerage industry consists of about 8,200 firms that employ over 123,000 workers and generate about $20 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
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          Jan 10, 2024 - Weak Sales Growth Expected
                          • Loan broker sales are forecast to increase at a 1.82% compounded annual rate from 2022 to 2027, slower than the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Industry employment decreased slightly during the first 11 months of 2023 while average wages for nonsupervisory employees increased significantly.
                          • Mortgage applications increased 9.9% in the first week of 2024, a sign that lower interest rates are bringing homebuyers off the sidelines, according to the Mortgage Bankers Association. Mortgage rates have been steadily decreasing since hitting a high of 7.79% at the end of October 2023, according to Freddie Mac. Many analysts and economists expect mortgage rates to continue to drop in 2024, given the Federal Reserve’s indication that it plans to cut its benchmark rates in the coming year, but rates aren't expected to go below 6%.
                          • Nonbanks have shown strong growth in the mortgage loan sector over the past decade, according to National Mortgage Professional Magazine (NMPM). Nonbanks originated only 12% of mortgage loans nationwide following the 2008 financial crisis but were originating 64% of loans by 2021. Many brokers have been seeing more FHA clients recently, according to NMPM. These buyers were priced out of the market during the pandemic housing boom. The need for more nontraditional loans has also allowed brokers to thrive, according to NMPM. Brokers have a real advantage in a high interest rate environment where more borrowers can’t qualify for conventional loans. Brokers have access to a wide variety of loans through different lenders, giving them an advantage.
                          • New Federal Housing Finance Agency rules will allow borrowers with lower incomes to qualify for lower fees while those with higher credit ratings or incomes could pay higher fees. The move is part of a broader effort by the federal government to “increase support for borrowers historically underserved by the housing finance market,” according to a statement from government-sponsored mortgage financing organization Fannie Mae. Borrowers with lower credit scores will, for the most part, still pay much larger fees than those with higher scores.
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