III. Industry Analysis
Last year, U.S. mortgage brokerages brought in revenues of $11.5 billion and employed 47,000 people. There were just over 12,000 businesses in this market. The Mortgage Brokers industry is highly fragmented, with the top two companies accounting for just over 11% of industry revenue. Key players in the American mortgage broker industry include LendingTree, and HomeServices of America.
Major revenue streams of the industry include: The bulk of brokerage fees and commissions come from residential mortgages, and the remaining revenue comes from brokerage fees and commissions on nonresidential mortgages and loans, and mortgage broker consulting fees.
A recent study commissioned by the Mortgage Bankers Association found that:
Except for very large firms, modest economies of scale persist throughout almost the entire range of output… while average firm size is increasing, many mortgage broker firms are too small to take full advantage of the cost reductions possible with a larger scale of operation. Equally important, large firms do not command a competitive advantage over smaller firms, as far as unit costs are concerned.This bodes well for a small firm starting out with experienced leadership.