|Last Quarterly Update:||3/20/2017|
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Companies in this industry lend money with real estate as collateral. Major companies based in the US include units of Bank of America, JPMorgan Chase, and Wells Fargo, as well as Quicken Loans; other major companies include units of Barclays Bank (UK), BNP Paribas (France), Deutsche Bank (Germany), and Nationwide Building Society (UK).
The use of mortgages to buy homes is most common in wealthy, developed countries where consumer income is healthy and legal and regulatory infrastructure is well established. Mortgage practices and rules vary. In many countries the government helps people buy houses through beneficial tax policies, but few governments purchase mortgages to provide security, as the US does.
The US mortgage banking industry includes about 12,700 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $100 billion.
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 US industry is concentrated: the eight largest companies generate about 50% of revenue.
Innovations such as Rocket Mortgage, Quicken Loans' fully online mortgage application process, are disrupting the industry's traditional business model. As more aspects of the home buying process migrate online, tech-focused ...
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