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RVP2021
MODULE1CASE1INDUSTRYOFCHOICEISONLINEMORTGAGEBROKERS.docx
COVID-19 (Coronavirus) Impact Update
IBISWorld's analysts constantly monitor the industry impacts of current events in real-time – here is an update of how this industry is likely to be impacted as a result of the global COVID-19 pandemic:
· Revenue for the Online Mortgage Brokers industry increased in 2020 due to surging demand from businesses conducted online. Industry revenue is expected to continue increasing, albeit at a slowe rate. For more detail, please see the Current Performance chapter.
· Due to a decline in the 30-year conventional mortgage rate, demand for online brokers has increased during COVID-19 (coronavirus) pandemic. For more detail, please see the Current Performance chapter.
· Demand for residential mortgages has increased over the five years to 2021, especially during the coronavirus pandemic as more consumers sought out newer and larger homes. For more detail, please see the Products and Service chapter.
Industry Definition
Closing time: Rising mortgage rates are expected to subdue refinancing activity
This industry includes companies that broker home mortgages online and companies that provide online mortgage marketplaces. It excludes banking and nonbanking institutions that originate home mortgages through online channels, but does include revenue from brokers that earn commissions on online home mortgages originated by these institutions.
Supply Chain
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2nd Tier Suppliers |
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1st Tier Suppliers |
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Online Mortgage Brokers |
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1st Tier Buyers |
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2nd Tier Buyers |
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Related Industries
· Commercial Banking in the US
· Savings Banks & Thrifts in the US
· Real Estate Loans & Collateralized Debt in the US
Related International Industries
· Non-Depository Financing in Australia
· Non-Depository Financing in the UK
· Non-Banks and Other Financial Institutions in New Zealand
Major Players
Main Activities
The primary activities of this industry are
· Brokering residential mortgages online
· Brokering mortgage refinances online
· Brokering home equity loans online
· Providing an online mortgage marketplace
The major products and services in this industry are
· Residential mortgages - single-family residences
· Residential mortgages - multi-family residences
· Refinancing
· Home equity loans
Similar Industries
Commercial Banking in the US Operators in this industry provide financial services to retail and business clients in the form of commercial, industrial and consumer loans. Savings Banks & Thrifts in the US Operators in this industry accept customer deposits and place them into interest-bearing products. Industry firms then use these deposits to provide consumer and business loans.
Real Estate Loans & Collateralized Debt in the US Operators in this industry provide lending services by selling securities, such as bonds, notes and stock or insurance policies to the public. Loan Brokers in the US Operators in this industry arrange loans, especially mortgages, by bringing borrowers and lenders together on a commission or fee basis.
Related International Industries
Non-Depository Financing in Australia The industry includes financiers that lend money or provide credit to retail, corporate and wholesale customers. Financiers in the industry raise funds through wholesale channels and do not incur the liabilities of deposits. Industry operators also lease plant, equipment and machinery on a financial services basis. Deposit-taking financial institutions are excluded from the industry. Non-Depository Financing in the UK This industry includes companies that lend money or otherwise grant credit. These organisations do not fund their lending through deposits as a bank or building society would. Instead, they sell bonds and shares and sell loans on to other companies. Participants range from non-depository mortgage finance companies to pawnshops.
Non-Banks and Other Financial Institutions in New Zealand Industry operators primarily provide finance to retail and commercial customers. This includes both deposit-taking and non-deposit taking firms that provide credit to retail, corporate and wholesale customers primarily on a financial-service basis. The industry excludes operating banks.
Additional Resources
Federal Housing Finance Agency
The National Association of Mortgage Brokers
Industry Jargon
FINTECH
Financial technology; technology that aims to compete with traditional financial methods in the delivery of financial services to improve delivery to consumers
MORTGAGE BROKERS
Intermediaries between lenders and borrowers that facilitate a mortgage transaction on a commission fee basis.
MORTGAGE LENDERS
Provide funds to borrowers in exchange for an agreement to pay back the original mortgage loan principal with interest.
MORTGAGE ORIGINATION
The process of creating a mortgage, during which a borrower submits financial information and a lender determines the borrower's eligibility and the characteristics of the loan.
REFINANCING
The replacement of an existing debt obligation with a debt obligation under different terms. This also includes cash-out refinancing loans.
Glossary
BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.
CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor. IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.
CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.
DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.
EMPLOYMENT
The number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry.
ENTERPRISE
A division that is separately managed and keeps management accounts. Each enterprise consists of one or more establishments that are under common ownership or control.
ESTABLISHMENT
The smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed. Multiple establishments under common control make up an enterprise.
EXPORTS
Total value of industry goods and services sold by US companies to customers abroad.
IMPORTS
Total value of industry goods and services brought in from foreign countries to be sold in the United States.
INDUSTRY CONCENTRATION
An indicator of the dominance of the top four players in an industry. Concentration is considered high if the top players account for more than 70% of industry revenue. Medium is 40% to 70% of industry revenue. Low is less than 40%.
INDUSTRY REVENUE
The total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease. Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)
The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry's contribution to GDP, or profit plus wages and depreciation.
INTERNATIONAL TRADE
The level of international trade is determined by ratios of exports to revenue and imports to domestic demand. For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20%. Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35%.
LIFE CYCLE
All industries go through periods of growth, maturity and decline. IBISWorld determines an industry's life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry's products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENT
Businesses with no paid employment or payroll, also known as nonemployers. These are mostly set up by self-employed individuals.
PROFIT
IBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability. It is calculated as revenue minus expenses, excluding interest and tax.
REGIONS
West | CA, NV, OR, WA, HI, AK Great Lakes | OH, IN, IL, WI, MI Mid-Atlantic | NY, NJ, PA, DE, MD New England | ME, NH, VT, MA, CT, RI Plains | MN, IA, MO, KS, NE, SD, ND Rocky Mountains | CO, UT, WY, ID, MT Southeast | VA, WV, KY, TN, AR, LA, MS, AL, GA, FL, SC, NC Southwest | OK, TX, NM, AZ
VOLATILITY
The level of volatility is determined by averaging the absolute change in revenue in each of the past five years. Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3%.
WAGES
The gross total wages and salaries of all employees in the industry.
