Nonbanks now account for 64% of new mortgage originations in the government-backed mortgage sector, up from 36% in 2009, according to a 2019 report from the Government Accountability Office.
Nonbanks are able to expand their market share for a few primary reasons. First, nonbanks have typically been more nimble when it comes to adapting to the changing regulatory environment. They have also been more aggressive about acquiring, pricing, and servicing mortgages. This has allowed them to capture a larger market share of the mortgage market.
Moreover, nonbanks have had success in leveraging technology to increase their market presence and simplify loan origination processes. Nonbanks have also relied on digital customer engagement tools to better market their products and services to customers. All of these factors have enabled nonbanks to gain a larger foothold in the mortgage market.
The growing presence of nonbank lenders in the government-backed mortgage sector has benefitted Ginnie Mae, as it has allowed them to maintain their market share in a time when their competitors are growing. Ginnie Mae relies on guaranteed payments from the Federal government on mortgages it packages and backs. As nonbanks have grown their market share, Ginnie Mae has been able to keep up, as it has traditionally served this market through MBS issuances.
In addition, Ginnie Mae is benefiting from the increased competition from nonbanks. Competition generally leads to lower prices for mortgages, which means lower costs for borrowers. This, in turn, increases demand for mortgages, helping Ginnie Mae to maintain its market share.
Overall, the increasing presence of nonbank lenders in the government-backed mortgage sector has been beneficial for Ginnie Mae. Nonbanks have been able to expand their market presence by leveraging technology and being more nimble when it comes to regulations. This has allowed them to capture a larger market share of the mortgage market. The increased competition from nonbanks has also allowed Ginnie Mae to keep up with a rapidly changing market and benefit from lower borrower costs. All of these factors have enabled Ginnie Mae to maintain its position in the mortgage market in a time when its competitors are growing.
This article was contributed on Sep 21, 2023
