Majority of top 10 home lenders are now non-banks
When looking to finance the purchase of a new home, buyers today are flocking to non-banks.
What was once the undisputed dominion of banks just a few short years ago is now an unfamiliar place where banks are the minority.
CNBC reports that of the country’s 10 mortgage lenders with the greatest loan volume, 6 are no longer banks.
From mortgage-focused specialty lenders like PennyMac Financial Services to tech-savvy online lenders like loanDepot.com, these non-banks rose to the top by bringing more options to the table for prospective homebuyers.
“There’s nothing wrong with getting a loan from a non-bank,” said Inside Mortgage Finance publisher and CEO Guy Cecala. “Often you’ll get better terms, better service and looser underwriting.”
You see, banks had it made in the early years after the 2008 financial crisis, when stricter regulations and rigid lending rules left borrowers with little choice but to walk through the bank doors. They dominated the mortgage lending scene for a while longer, but their complacency with higher interest rates and inflexible underwriting opened the door for competition.
PennyMac was only founded in 2008, and loanDepot didn’t launch until 2010. In general, non-banks often got their starts with backing from private equity funds and hedge funds.
They also took advantage of the growing nationwide shift in how people work by being flexible enough to meet the needs of non-traditional borrowers – not just those with questionable creditworthiness but also those whose income streams are less predictable – particularly the self-employed.
Because today’s borrowers come from so many unique circumstances, it’s important for prospective homebuyers to compare their options, including the different loan types available, mortgage interest rates and terms, lender requirements and home loan fees.
With non-banks leading the way, there are now countless paths you can take to wind up on the doorstep of the American dream.