Companies in this industry lend money with real estate as collateral. Major companies include units of Wells Fargo, JPMorgan Chase, Bank of America, and online mortgage lender Quicken Loans (all based in the US), as well as units of Barclays Bank (UK), BNP Paribas (France), Deutsche Bank (Germany), and Nationwide Building Society (UK).
The use of mortgages to buy homes is most common in wealthy, developed countries where consumer income is healthy and legal and regulatory infrastructure is well established. Mortgage practices and rules vary. In many countries the government helps people buy houses through beneficial tax policies, but few governments purchase mortgages to provide security, as the US does.
The US mortgage banking industry includes about 13,000 establishments (single-location companies and branches of multi-location companies) with combined annual revenue of about $90 billion.
Demand for mortgage services is driven by home sales and the refinancing that occurs when mortgage rates are low. The profitability of individual companies depends on volume, interest rate spreads, and efficient operations. Large companies have big economies of scale in operations. Small companies compete successfully by funneling mortgages to the large companies. The US industry is concentrated: the 50 largest companies generate about 75% of revenue.
The US subprime mortgage crisis, which helped trigger a recession in 2008, led to the downfall of several prominent US mortgage lenders. A handful of brand-name banks emerged as industry leaders. JPMorgan Chase took over Washington Mutual...