Mortgage Market Competition & Composition - 8.17.2023

by Ryan Schoen , Sr. Insights Analyst

Two weeks ago in our housing market update, we stated that “the housing market continues to shrink, adding pressure to mortgage industry participants and would-be homebuyers as both search for new strategies to gain market share and complete their homebuying journey.” Fast forward to today and that pressure continues to mount as 30-year fixed mortgage rates have ticked up to 7.26% representing the highest level since November 4th, 2022. Given the increasingly competitive nature of the housing market today, here are some visuals that paint the picture of the mortgage market battlefield.

Trends in Mortgage Originations

The rising interest rate environment continues to push the purchase share of mortgage originations to new heights. The increased cost in financing a home purchase has also led borrowers to seek low downpayment product solutions such as FHA loans. Additionally, the recent bank failures and liquidity concerns have led to big banks pulling back their lending capacity for Non-Agency Jumbo products. These trends have left the door open for third-party originators (correspondent and broker) to gain market share over retail lenders.

Top Mortgage Lenders

With the market shifting in favor of third-party originators it’s no wonder that broker-focused lender United Shore / United Wholesale Mortgage (UWM) found itself at the top of the list in most counties across the country in 2022. That said, the map below illustrates just how fractured the mortgage landscape remains as each of the top 10 purchase lenders in 2022 has their own respective pockets of dominance, but many smaller counties had a top lender that was outside of the overall top 10.

?Densely populated areas where competition is highest and almost all the transaction volume is up for grabs are exactly where larger players like UWM have focused their efforts.

UWM retained the top spot in the largest markets across the country and created market share dominance to second-place lenders such as Rocket Mortgage in key markets mainly concentrated in high loan amount locations of California and Florida.

Mortgage Originations by Race & Ethnicity

Diving further into the 2022 Home Mortgage Disclosure Act (HMDA) data reveals that lenders go to market strategy and their lending footprint can have major implications on market share.

Based on loans where race/ethnicity was reported, UWM achieved a 5.34% market share for white borrowers vs Rocket’s 3.34%, but more than 3x their market share when it came to the Hispanic market at 8.88% vs 2.87%. This leads to questioning whether the increased market share for UWM among the Hispanic community is a sign of Hispanic borrowers having a decreased willingness to transact online and instead prefer to do business with local loan officers and realtors.

If that is the case, then recruiting local loan officers and forging realtor relationships in the Southwest is the way to gaining traction among the Hispanic community. Additionally, forging connections in the Southeast is the way to gaining traction among the Black community and setting up shop in metros with a major tech focus is the way to attracting Asian borrowers.

Mortgage Originations by Product

As we stated at the start of this update, low downpayment products such as FHA and VA loans are clearly providing a solution that is needed in this market environment for borrowers to achieve homeownership. These products also happen to be most in demand in the Southwest (Hispanic markets) and Southeast (Black markets).

Mortgage Originations by Age

The final visual that we will share in our efforts to paint the mortgage market battlefield identifies where younger homebuyers are finding the most success in achieving homeownership. No surprise here. Most younger borrowers are finding that more affordable markets in the Midwest are where the sweet spot is.

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