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Mortgage Banking Industry Profile Excerpt
| SIC Codes: 6162 NAICS Codes: 52231, 522292 Page Length: 10-12 Last Quarterly Update: 4/28/2008 View Sample Industry Profile |
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The US mortgage banking industry includes 6,000 firms with total annual revenue that varies between $50 and $100 billion. Large companies include Washington Mutual; and units of Wells Fargo, JPMorgan Chase, Citigroup, and Bank of America.
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 fragmented at the bottom but highly concentrated at the top: the largest 50 companies hold more than 70 percent of the market.
PRODUCTS, OPERATIONS & TECHNOLOGY
Mortgage bankers lend money to homeowners through a mortgage, with the home as collateral. The traditional mortgage has a fixed interest rate and level monthly payments that pay off the loan over 30 years, but loans with adjustable interest rates (ARMs) and variable payment schedules have become common in recent years.
While mortgage loans are usually made to buy a home (a "purchase" mortgage), they're also made to refinance an existing mortgage (typically at a lower interest rate), or to provide cash to the homeowner (a home equity loan).
The main functions of mortgage bankers are loan production, underwriting, and servicing. Large mortgage bankers may also create and trade mortgage-backed securities.
Loan production is sales. Mortgage bankers advertise heavily ...
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