The share of mortgages originated by brokers will decline, damaging potential fees for industry operators
New York, NY (PRWEB) February 26, 2015
Steep declines in the performance of housing markets, a result of the subprime mortgage crisis, dramatically harmed the Online Mortgage Brokers industry over the five years to 2015. Industry operators bring consumers seeking mortgages together with lenders on a fee basis. While the total value of mortgage originations is anticipated to increase over the five-year period, according to the latest available data from the Federal Housing Finance Agency (FHFA) and IBISWorld estimates, it remains far below its prerecessionary value. Moreover, refinance originations as a percentage of mortgage debt outstanding are anticipated to fall over the period, according to the FHFA and IBISWorld estimates; rising mortgage rates primarily explain this trend, with a sharp increase in housing starts in 2015 causing industry revenue to increase during the year.
According to IBISWorld Industry Analyst Stephen Hoopes, “Furthermore, lenders continue to bypass mortgage brokers during the origination process.” Large banking institutions, like Wells Fargo and Bank of America, have decided to no longer work with independent brokers, with reasons varying from negotiation difficulties to brokers' production of predatory loans prior to the housing bust. Consequently, according to Inside Mortgage Finance and IBISWorld estimates, the share of mortgages originated by brokers is expected to decline, dramatically damaging potential fees for online mortgage brokers. Partially a result of this trend, industry revenue is anticipated to decline at an annualized rate over the five-year period.
Over the five years to 2020, the industry's performance is forecast to improve rapidly, with revenue anticipated to rise at an annualized rate. “The forecast increase in housing starts is expected to drive increases in both mortgage originations and industry fees garnered from these mortgages,” says Hoopes. Moreover, according to Advertising Age and IBISWorld estimates, the percentage of services conducted online is set to increase from 2015 to 2020, benefiting industry fees significantly. The sourcing of mortgage services online is not only more convenient, but also comes with explicit cost advantages.
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, firms that broker home mortgages online and firms that provide online mortgage marketplaces. 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.