Skip to main content

Study: Large Banks Lag Behind Indie Lenders on Profits Per Mortgage Loan

Phil Hall
Jun 20, 2019
Photo credit: Getty Images/William_Potter

When it comes to making a profit on retail residential mortgages, the large banks can take a lesson from their independent rivals, according to new data from Stratmor Group.
 
According to the Greenwood Village, Colo.-based Stratmor Group, large banks lost $4,803 per retail mortgage loan originated in 2018 while large independent lenders which earned on average of $376 per loan. Large banks captured four percent of the available mortgage volume from their customer base last year, compared to 8.1 percent at regional banks, and the large banks recaptured only 12 percent of their own customers who paid off an existing mortgage while the large independents boasted a 30 percent retention rate.
 
Principal Tom Finnegan explained the disparity by noting the large banks’ strategies in the mortgage space were off the mark.
 
“Portfolio loans, and jumbo loans specifically, are being priced aggressively by the banks, leading to imputed revenue that is lower than might be expected otherwise,” he said, adding that large banks also mostly jettisoned FHA and VA lending, which the independents used to their advantage. “Because FHA and VA loans typically offer the ability to price with wider margins, not participating in this loan segment can also contribute to lower per loan revenue.”
 
Furthermore, Finnegan faulted the large banks for not responding quickly to changing market trends, especially in the recent dominance of purchase mortgages over refinances.
 
“When our industry becomes dominated by purchase money mortgages, the large banks' natural advantage in terms of new loan opportunities dissipates,” Finnegan said.

 
Published
Jun 20, 2019
Angel Oak Layoffs Add To Growing List Of Non-QM Cuts

About 20% of its staff, or 75 people, were affected.

Industry News
Sep 28, 2022
Redwood Trust Names New Chief Investment Officer

Also announces planned CoreVest leadership transition to be completed on 3rd anniversary of acquisition

Industry News
Sep 27, 2022
Fannie Mae Pilot Program Seeks To Help Improve Renters' Credit

Renters, including historically underserved groups, will benefit from paying on time each month.

Industry News
Sep 27, 2022
Suffolk County Data Breach Puts Contracts On Back Burner

Cyberattack beginning Sept. 8 prevents title services from closing loans.

Tech
Sep 27, 2022
Nations Lending Opens Another Branch In Arizona

New Scottsdale branch welcomes Arizona native Christine McConnell as lead personal mortgage advisor.

Industry News
Sep 26, 2022
Nominations Open For Industry Titans Award

NMP Magazine to honor people who represent industry with professionalism.

Industry News
Sep 23, 2022