Mortgage Market Dynamics: Competition and Evolution

Abstract

The mortgage industry is currently undergoing some significant changes, with declining origination volume, a shifting mix of originations with a much higher share of purchase loans, and other factors leading to growth in market share for independent mortgage bankers but declining profit margins across the board. These changes are leading to a sharper focus by policymakers and market participants on the independent mortgage banking business model. This article highlights the key features of the current environment, with specific focus on some of the differentiators across business models. The industry will evolve over the next few years in response to this challenging environment, toward lenders who can best control costs while meeting customer needs better than the competitors gaining market share.