Mortgage refinancing gave the industry a lift as consumers sought cheaper loans with better terms
Los Angeles, CA (PRWEB) August 08, 2012
The Online Mortgage Brokers industry, which includes online non-bank mortgage brokers and lenders, defied the housing downturn to become a significant force in the consumer mortgage market over the past five years. While there is significant overlap of mortgage lending and brokering operators online, IBISWorld estimates online brokers account for 89.6% and 11.1% of industry firms and revenue, respectively, while online lenders account for 10.4% and 88.9% of firms and revenue, respectively. Over the five years to 2012, IBISWorld estimates industry revenue grew at a 5.1% average annual rate, including projected growth of 5.5% in 2012 to about $9.8 billion, according to IBISWorld industry analyst Doug Kelly. The primary driver of industry growth over the past five years has been favorable changes in consumer preferences for online mortgage brokering and lending services. The percentage of overall services conducted online, which closely correlates with consumers' use of online mortgage lending and brokerage services, increased from 5.9% in 2007 to 9.4% in 2012. This trend has been underpinned by restricted lending from banking institutions forcing consumers to seek out alternative sources of credit from industry lenders and brokers, and the time and cost savings that industry services provide consumers who are searching for the best mortgage options. Additionally, government intervention in mortgage markets has pushed mortgages rates to decade lows, spurring steady demand from mortgage originations and refinancing; industry operators captured much of this demand while banks sat on the sidelines.
IBISWorld expects Online Mortgage Brokers industry revenue to grow further during the five years to 2017. Consumers will increasingly use online mortgage brokers and lenders to seek out the cheapest mortgages with the most favorable terms. “At the same time, gradual improvements in employment and consumer income levels, along with rising housing prices, will increase the number of consumers who qualify for mortgages and refinancing by 2014, further driving industry revenue increases,” Kelly says. However, industry growth will be tempered by rising mortgage rates, higher compliance costs from regulation after the financial crisis and greater external competition from banking institutions.
The industry is fragmented and largely comprised of self-employed brokers who typically serve one or several states. Therefore, no operator holds a significant market share. And the number of participants is increasing, with low barriers to entry and strong anticipated growth during the foreseeable future.
For more information, visit IBISWorld’s Online Mortgage Brokers in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes firms that originate home mortgage loans online and firms that broker home mortgages online. It excludes banking institutions that originate home mortgages through online channels, but does include revenue from brokers that earn commissions on online home mortgages originated by banking institutions.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.