A leading global IT solutions provider was looking to improve its understanding of the retail mortgage market in one of its European markets. They wanted to better understand the value chain and operational processes to position themselves as a preferred technology partner. In order to do this, they turned to a research project to assess the industry. The result was a report with detailed insights into the most important dimensions and success factors that shape the retail mortgage market.
The meeting was convened by the Citizens Housing and Planning Council and included representatives from various sectors of the housing industry. The discussion was moderated by Dan Levitan, the managing director of Manhattan Mortgage Company and a founding partner of Home Mortgage Acceptance Corp. In September 2008, the government placed Fannie Mae and Freddie Mac into conservatorship and provided them with $96 billion to ensure their financial solvency.
The increased access to credit reports has also had an impact on the retail mortgage market. As a result, there has been a significant increase in the number of mortgage approvals. These approvals have been higher for those with lower incomes and in areas with higher credit-worthiness. As a result, many people are taking advantage of the opportunity to purchase a home.
While there are several types of mortgage lenders, they are not mutually exclusive. Some lenders operate both wholesale and retail. For instance, large banks have both wholesale and retail mortgage lending operations. While the two types of mortgage lenders share some characteristics, they differ in terms of their business models. For example, most portfolio lenders are direct lenders. But there are also brokers that work in the retail mortgage market.
Mortgage brokers work with several lenders and can save you valuable time by shopping around for the best deal. These professionals also have access to competitive rates and dozens of different loans. By shopping around and comparing mortgage quotes, these professionals can help you secure a mortgage with the best terms at the lowest rate. As a result, they are compensated through commissions from loans they help close.
In the last three years, the total mortgage spread between wholesale and retail mortgage rates has increased significantly. The difference between wholesale and retail prices represents the mortgage originator’s gross profit margin, which includes marketing, short-term financing, and other costs. This difference is referred to as the net profit of the mortgage originator. While the retail mortgage market remains very competitive most of the time, there have been periods with unusually high gross profit margins.