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
                          Source: Vertical IQ and Inforum

                          Recent Developments

                          May 20, 2024 - Weak Sales Growth Expected
                          • 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 and nonmortgage loan broker industry employment decreased slightly during the first quarter of 2024 while average wages for nonsupervisory employees increased moderately, according to the US Bureau of Labor Statistics.
                          • 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 applications to purchase a home increased 2.6% during the seven-day period ending on May 3, according to the Mortgage Bankers Association. Demand was 13.5% lower than the same week a year earlier, however. Both purchases and refinances finished with greater volumes compared to the prior seven-day period.
                          • 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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