THE BASIS POINT

5 Trends Reshaping U.S. Home Mortgage Industry – which has $12 trillion in loans outstanding and will fund $2.6 trillion in new loans in 2022

 

The tail may wag the dog in 2022 with overvalued consumer-direct fintechs buying undervalued mortgage giants.

 

The McKinsey team isn’t exactly close to the mortgage space, but they’re among the best at studying industries as a whole to find the most relevant insights. In this piece they review fintech that’s powering lenders, the rising role of nonbanks and sub-servicing, the market cycle of non-government-backed (aka Non-QM) lending, and one-stop shop models.

To those of us on the weeds, this might seem behind the curve — these trends have all been building for years now. But still, there are some notable insights in this piece. And critically, when a firm like McKinsey starts to cover these topics, it means mortgage is finally starting to get the credit it deserves in consumer financial services.

Mortgage has always been the hardest of all consumer financial products, and the best mortgage firms will find it easier to expand into non-mortgage than it will for non-mortgage firms to expand into mortgage.

But I should also note there is one exception to this: non-mortgage consumer finance firms — especially the newer consumer-direct fintechs (as opposed to fintech software that power banks and lenders) — can have valuations much larger than even the biggest mortgage firms.

What does this mean? The tail may wag the dog in 2022 with overvalued consumer-direct fintechs buying undervalued mortgage giants.

Below is a link to the McKinsey piece. Please reach out or comment below with questions.

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McKinsey's 5 Trends Reshaping U.S. Mortgage Industry

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