Nonbank participation in the mortgage market reached its highest level in two decades during 2014, according to Freddie Mac’s October Insight & Outlook report released Monday. The market share of non-depository, independent mortgage companies tumbled after the Great Recession with the collapse of the mortgage and secondary markets—especially those companies that were focused on subprime lending. In 2014, the market share of independent mortgage companies rose to 47 percent for home purchase loans and 42 percent for refinance loans, the highest those shares have been at any point in the last 20 years.
Data from the Home Mortgage Disclosure Act showed that the increase in market share for nonbanks has been broad-based across different loan types and demographic groups and is attributed to a number of factors. Those factors include increased capital requirements for banks, which have made the mortgage industry less profitable for banks; and increased regulation for banks, which has made those institutions more concerned about liability for noncompliance.
With interest rates lower than they have been since 2012, now is likely the best time to purchase a home, according to Trulia’s most recent Rent vs. Buy Report. The report shows that purchasing a home is 23 percent cheaper than renting nationwide for millennials and cheaper than renting in 98 of the nation’s top 100 markets. Honolulu, Hawaii, and San Jose, California, are the only metros where buying a home is more costly than renting at 5 percent and 2 percent pricier to buy, respectively.