The bank has seen its mortgage origination numbers fall significantly in the past few years while competitors like Wells Fargo, Quicken Loans, Bank of America, CitiMortgage, and US Bank have increased their market share. This decline has been attributed to the bank's focus on larger loans and streamlining its loan process.
A possible reason for this change is that Chase wants to avoid risk and does not want to take a chance on any new mortgages that it does not believe will be profitable in the long run. This means that people with lower credit scores and smaller loan amounts may have a difficult time getting approved for a mortgage through the bank. Consequently, those seeking smaller mortgages may opt for other lenders instead.
This shift has the potential to impact the entire mortgage industry. With fewer lenders willing to offer loans to those with lower scores, it could lead to a decrease in the number of home buyers overall. This would reduce demand for houses and have negative consequences for the housing market, as prices could potentially be driven down.
The decision by Chase may also lead to more consolidation in the banking industry, as smaller lenders try to pick up the slack left by the larger institutions. However, this could result in less competition among lenders, as fewer entities would be vying for business. This could also mean higher costs for borrowers, as there would be less pressure for banks to provide competitive rates for their products.
Given the importance of mortgages to the economy, any changes to the industry should be monitored closely. If Chase continues to lose interest in originating mortgages, other lenders may follow suit, leading to major disruptions in the market. It is important to ensure that borrowers continue to have access to decent rates and terms, regardless of where they shop for a mortgage.
This article was contributed on Nov 07, 2023