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
Jul 18, 2024 - Labor Costs Increase
- Mortgage and nonmortgage loan broker industry employment increased slightly during the first five months of 2024 while average wages for nonsupervisory employees increased significantly, 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.
- Mortgage applications decreased for a third week in a row during the week ending July 5 even as purchasing activity increased, according to the Mortgage Bankers Association (MBA). Mortgage applications decreased 0.2% from one week earlier, when they decreased 2.6% from the prior week. "The recent uptick in mortgage rates has slowed demand," Joel Kan, MBA's vice president and deputy chief economist, said. The 30-year fixed-rate mortgage average interest rate was 7% during the week ending July 5. "Purchase activity picked up slightly, driven primarily by increases in FHA and VA applications," Kan added.
- 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.
- 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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