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December 12, 2011

Higher Rates Soon? Mortgage Broker Market Share.

December 12, 2011

Higher Rates Soon? Mortgage Broker Market Share.

The death of mortgage brokers has been predicted for years, mostly by mortgage bankers. Brokers don’t make loans, they place clients in loans made by bigger banks they work with. And their market share has been growing according to American Banker:

Perhaps the future for loan brokers [as opposed to bankers] isn’t so bleak after all. Wholesale lenders table funded almost $33 billion of loans in the third quarter, giving the channel a 9.2% market share, according to new figures compiled by National Mortgage News and the Quarterly Data Report. In the first and second quarters of this year brokers had market shares of 6.8% and 7.9%, respectively. The 6.8% figure marked an all-time low for the industry. Three years ago they had a 19% share.

If you’re a mortgage consumer, read this for more on the differences between mortgage bankers and brokers.

How about these rates!? No one in the mortgage business is complaining about them, but what trends are developing? Our fixed income markets are “caught between the opposing forces of strengthening U.S. economic data and the must-be-a-crisis-somewhere Eurodebacle,” says Paul Jacob with Banc of Manhattan. “But several trends have caught our attention that, collectively, suggest a potential range break to higher yields.”

Mr. Jacob sums up that U.S. data has been on a solid run especially on the consumer side, stocks are “hanging tough,” and volatility has decreased on various levels. The lockstep stock/bond correlation has been weakening. And if the bond market is not quite so crisis-obsessed, yields have to be justified in the context of economic fundamentals and a 2% 10-year isn’t compatible with 4% nominal GDP growth.
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Reference:
American Banker: Loan Brokers Increase Market Share