Mortgage Banking Industry Profile

Companies in this industry lend money with real estate as collateral. Major companies include units of Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo (all based in the US), as well as units of Barclays Bank (UK), BNP Paribas (France), and Deutsche Bank (Germany).

The US mortgage banking industry includes about 15,000 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $70 billion. Moderate growth is forecast for the next two years. Key growth drivers include increased home sales and continued low interest rates, which promote the refinancing of existing mortgages.

COMPETITIVE LANDSCAPE

Demand for mortgage services is driven by home sales and the refinancing that occurs when mortgage rates are low. The profitability of individual companies depends on volume, interest rate spreads, and efficient operations. Large companies have big economies of scale in operations. Small companies compete successfully by funneling mortgages to the large companies. The industry is concentrated: the 50 largest companies generate about 75 percent of revenue.

The global financial crisis of 2008-2009 redrew the mortgage banking landscape. Several prominent mortgage lenders became insolvent and were acquired after subprime mortgages failed. A handful of brand-name banks emerged as industry leaders. JPMorgan Chase took over Washington Mutual after its mortgage unit's losses led to the largest bank failure in history. Bank of America bought Countrywide Financial, once the nation's largest mortgage lender. IndyMac, California's largest ...