Why small- and mid-sized mortgage firms are fighting for their survival

Companies are cutting staff and shutting down as growth in market slows

TRD NATIONAL /
Nov.November 23, 2018 11:30 AM

(Credit: iStock)

It’s a rough time to be a small mortgage firm.

The companies are cutting staff, shutting down and trying to sell themselves. It’s yet another sign of increasing pressure on the housing market due to rising interest rates and the maturation of a long economic expansion, according to the Wall Street Journal.

The number of nonbank mortgage lenders dropped by around 3.5 percent halfway through 2018 when compared to the end of 2017, and mortgage-loan-originators at the companies declined by more than 11,000, according to the Conference of State Bank Supervisors.

Relying heavily on mortgage refinancings, nonbank lenders had grown for several years prior to this, taking mortgages away from traditional banks by being able to move faster and occasionally having a better knowledge of the local markets. Industry experts now expect their ranks to continue shrinking moving forward, given that rising interest rates will continue to make it more expensive to buy a home and dry up the mortgage refinancing business.

Housing sales are slowing down as well thanks to concerns about affordability and increasing prices for labor and materials, which is slowing down the number of projects going forward.

Lenders are trying to navigate the new landscape using tactics like selling their mortgage-servicing rights or lending to borrowers they would have previously overlooked. Dan Gilbert, chairman of the largest nonbank lender Quicken, told the Journal that purchase mortgages are becoming more central to the company’s business.

“Rising rates are headwinds to us,” he said. “When rates go low, there are tailwinds. But either way the plane has to fly.” [WSJ] – Eddie Small


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)

Real estate stocks push up this week as U.S.-China trade tensions ease

Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case

Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Developers pulled back on advertising as online traffic and print subscriptions grew (iStock)

Real estate ad dollars vanished as pandemic spread

Real estate ad dollars vanished as pandemic spread
Photo illustration of GDSNY CEO Michael Kirchmann, Klövern CEO Rutger Arnhult and 417 Park Avenue (Google Maps, iStock)

Klövern, GDS finance 417 Park Ave with $100M in Swedish bonds

Klövern, GDS finance 417 Park Ave with $100M in Swedish bonds
317 West 77th Street (Google Maps, iStock)

Townhouse owners make federal case of cell tower next door

Townhouse owners make federal case of cell tower next door
Fredrik Eklund, Julia Spillman and John Gomes (Getty, iStock)

Threatened by tech, agents turn to app

Threatened by tech, agents turn to app
(iStock)

Mortgage applications to buy homes now higher than a year ago

Mortgage applications to buy homes now higher than a year ago
Photo illustration of Robert Reffkin (Getty, iStock)

Compass reboots lending — with some caveats

Compass reboots lending — with some caveats
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...