Real Estate News

Are banks no longer major mortgage lenders?

Published: 01 Mar 2017

Traditionally, banks have been a well-known source of mortgage plans for home buyers. While this may still be true, lending companies, which solely focus on granting these loans instead of other financial services, seem to be taking the lead in this sector, gaining consumer trust and business.

In an article earlier this month, MarketWatch culled information from the Mortgage Bankers Association to determine the growing role of "non-banks" in housing lending. In 2007, the source said, nearly three-quarters of mortgage lending came from commercial banks, but just seven years later, that number dropped to 52 percent.

By 2014, non-bank mortgage lending activity had grown to account for 43 percent of this sector. The number of credit unions in this space grew as well, although it only made up 5 percent of mortgage lending three years ago.

The Washington Post also recently examined this trend, noting that the combined mortgage share of the top three banks in the U.S. dropped by nearly 30 percent between 2016 and 2011. The Post spoke to Navigant Consulting Managing Director Paul Noring about the changes seen in recent years, and whether or not they really impact individual mortgage applicants.

"For consumers, it doesn't really matter whether you get your loan through a bank or a non-bank, although in some ways non-banks are a little more nimble and can offer more loan products," Noring said.

He also said that the addition of non-bank lenders has meant more loan recipients in the market and a net gain for the industry as a whole, though compliance and regulation still remain important for all institutions that offer loans for these situations. The growing attention to housing risk over the years may have also contributed to consumer lending trends.