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 6,800 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 $1-2 million annually.

    • The mortgage and nonmortgage loan brokerage industry consists of about 6,800 firms that employ over 100,000 workers and generate about $12 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 64% of origination volume.
                          Industry Forecast
                          Mortgage & Nonmortgage Loan Brokers Industry Growth
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          Nov 2, 2022 - Pending Home Sales Decrease
                          • Pending home sales, a measure of signed contracts on existing homes, decreased 10.2% month over month in September, according to the National Association of Realtors (NAR). The NAR's pending sales index hit the lowest level since June 2010, excluding a steep but short pandemic-related drop in April 2020. Mortgage demand and new listings are also decreasing because homeowners are unwilling to give up their record-low interest rates to trade up to a much higher one. For potential buyers, the increase in rates means the monthly payment on a median-priced home, with a 20% down payment, is now close to $1,000 higher than it was in January 2022.
                          • Home builders stuck with more houses and land than they can sell are contacting investors in an attempt to sell homes in bulk to reduce inventory, according to The Wall Street Journal. Bruce McNeilage, co-founder of rental-home investment company Kinloch Partners, says that he is being cold-called by builders offering to sell him thousands of completed or planned homes at discounts of up to 20% off what they would likely charge prospective home buyers. Experts say that landlords who can pick up large bundles of homes are the most eligible customers remaining with mortgage interest rates pushing 7%, and traditional buyers disappearing from model home showrooms across the country. September 2022 was the worst month for new construction buyer traffic since 2012, according to the NAHB/Wells Fargo Housing Market Index.
                          • The Mortgage Bankers Association said it expects overall mortgage originations, which include refinancing loans, to decrease 35.5% year over year in 2022. The lowered outlook comes as demand for refinancing sinks. Applications to refinance a home loan were 62% lower in late April than they were a year earlier. Originations for purchases are still forecast to increase to a record $1.72 trillion this year, but the previous forecast was for $1.77 trillion.
                          • A Biden administration program is providing help to distressed mortgage borrowers, enabling them to avoid foreclosure, according to The Wall Street Journal. The new relief program allows borrowers with loans backed by the Federal Housing Administration (FHA) and other federal agencies to extend the length of their mortgage and reduce monthly payments by up to 25%. The nationwide moratorium on foreclosures expired on July 31, 2021. There was an initial surge in foreclosures after the moratorium expired but they have since declined amid support from government and mortgage industry programs and the recovery of the US economy, according to property data firm ATTOM.
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