The three biggest lenders in the U.S. own a gigantic 55% share of the mortgage market.
That’s an incredible degree of concentration given that the U.S. has 6,498 banks. (By contrast, Canada has just 46 schedule I and II banks.)
In 2005, the top three lenders in the U.S. accounted for “only” 36% of market share, says MortgageDaily.com.
What happened in those five years?
Among other things, thousands of small lenders and brokers disappeared, due largely to heavy regulation, fewer funding sources and the elimination of broker channels by leading U.S. banks.
Given that major banks now dominate the American market, we called on two U.S. lending contacts (a broker and a loan officer at a U.S. Bank) for perspective. They essentially told us the same thing in different ways—that American consumers have seen:
less competitive rates
mortgage options evaporate
approval requirements become extremely rigid
much slower underwriting and closing timeframes
And, it’s not over. Legislation due in April and the threatened withdrawal of government mortgage backing could shift even more market share to the major banks. From the looks of it, mortgage competition in the U.S. is alive, but not well.