LOCAL LENDERS HAVE AN EDGE!

According to a report by Inside Mortgage Finance, Smaller bank and non-bank lenders’ share of the mortgage market rose to 60 percent in the third quarter, versus 39 percent in 2009.   The resounding message is that in a highly regulated market, the smaller and more nimble lenders are the most competitive.

CNBC’s Comments about Smaller Lenders & Market Trends

• While 203,000 jobs added to the U.S. economy in November is welcome news, it will push interest rates higher—specifically, residential mortgage rates. Those rising rates, along with tighter underwriting and fast-rising home prices, are pushing borrowers away from larger lenders.
• Smaller bank and nonbank lenders’ share of the mortgage market rose to 60 percent in the third quarter, versus 39 percent in 2009, according to Inside Mortgage Finance. Those outside of the top 25 largest lenders rose to 35 percent of the market from 13 percent in 2009.
• What’s more, the big banks are pulling out in a big way—just five of the top 20 single-family mortgage originators in 2006 remain active in the market, according to a recent Fannie Mae report.
• “If you’re buying a house, our advice is to find a local lender that’s reputable,” said Eric Egenhoefer, president of Waterstone Mortgage, a subsidiary of Milwaukee-based WaterStone Bank. “An independent company in general is more nimble, can get to a closing faster and provides better service.”
• With refinance volume down more than 60 percent from a year ago, Wells Fargo, the largest lender in the U.S. with a 22 percent market share, has laid off hundreds of workers.  So have many other large lenders.
• Historically low rates and higher fees charged by Fannie Mae and Freddie Mac are squeezing lending margins, so big banks are focusing on more lucrative businesses.

What’s Better? Mortgage Banks, Traditional Banks or Mortgage Brokers? It is worth while to check all three, but Mortgage Brokers usually have more freedom to select the best program for your needs.

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