The Share Of Residential Mortgages By Big Banks Is Dropping

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February 18, 2016

In 2007, commercial banks accounted for 74 percent of mortgage lending. Non-banks accounted for 23 percent and credit unions accounted for 3 percent. Fast-forward to the most recent data available from the Mortgage Bankers Association in 2014 and commercial banks have lost a huge portion of residential mortgages, and their slice of the pie could get even smaller.

In 2014, commercial banks accounted for just over half, 52 percent, of mortgage lending while non-banks and credit unions accounted for 43 percent and 5 percent respectively. After banks played a major role in the housing bubble that helped to destroy the economy, many are now afraid to lend even to buyers with fantastic credit, MarketWatch reports.

Wells Fargo, which was the number one lender among commercial banks, originated $47 billion in mortgages in the fourth quarter of 2015. In the fourth quarter of 2012, Wells Fargo originated $125 billion in mortgages, a pretty steep decline.

Some experts believe banks will exit completely from originating and servicing residential mortgages, while others aren’t so sure.

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