AS 2014 DRAWS TO A CLOSE, it is an appropriate time to review some of the key trends that have emerged in the mortgage industry throughout the course of the year. While it was not the all-time worst of years, it was one of the worst in the last two decades.
A look at the major developments and data provides a glimpse into the state of the market and how 2015 might take shape.
Volumes are down--way down
Since peaking in 2003, industry volumes have typically resembled a sledding hill, hurtling downward since its high point more than 10 years ago. The only bright spot is a jump at the bottom of the hill that started in mid-2013 and has steadily continued into present day, which represents purchase's share of the market.
While the purchase share increase is largely driven by the denominator effect, it has increased to roughly 60 percent of the market in 2014. Even for purchase-focused shops, however, volumes are down this year.
These purchase-oriented shops likely also face increased competition as refi-oriented shops have seen a 64 percent decline in their volumes, and they are calling Realtors[R] to drum up business. All in all, it has not been fun to have the worst year in volumes since 2000, with next year not expected to be much better.
Market share continues to shift from the big banks
According to a Forbes article that compiled a number of banks' quarterly announcements, the top-five banks have shed nearly 20 percent origination market share since peaking in the second
quarter of 2012, dropping from 53 percent to 33.3 percent in the first quarter of 2014. In a $1 trillion market, this means there is roughly $197 billion in originations that is up for grabs for non-depositories or smaller banks--a scenario that would not have developed had the banks not shed share.
This trend has also occurred in servicing, where, according to Mortgage Stats.com, the top-five banks dropped from 64.6 percent to 55.5 percent over the same period, representing $700 billion of unpaid principal balance--somewhat of a "jump ball"--for others.
Private-label securitizations and non-QM
Through July, the industry had seen just over $1.5 billion in private-label securitizations, and it seems unclear where this will net out for the year. With new regulations, gun-shy lenders, strapped consumers and other uncertainties, this sector of the market does not appear ready for a rebound quite yet.
Meanwhile, non-Qualified Mortgage (non-QM) loans seem like the most...