Holiday Reversal – Wholesale Leaders November 2010

Holidays seem to come faster each year for all of us (Christmas music will start in July this year!), and then they’re gone just as fast. Our first Wholesale Leaders report of the new year shows a similar disappearance, as the broker/wholesale side of the industry sees the beginnings of a positive trend from Sep-Oct vanish in November.

After 2 consecutive months of outpacing retail/direct endorsement growth, wholesale fell way behind retail in the upswing. Gaining 10.4% in most months would be a strong performance, but pales in comparison to the 34.5% surge in retail. For the past six months, wholesale has grown slower when the industry grows but also shrinks less when the industry declines.

That might be a recipe for slow and steady wins the race, but at least so far it’s only been enough to slow the advance of retail’s market share from 47.8% in December 2009 to 61.1% in November 2010.

Among top 10 lenders, 3 of the 9 with wholesale business grew their volumes, while just 2 of the 10 grew retail. That may not sound like a dominant performance, but it’s easier to understand why the top 10 gained share if we look at how many grew OR declined less than the industry overall.

  • Retail channel outperformed industry decline for 8 of top 10 lenders
  • Wholesale channel outperformed for 7 of the 9 top 10 lenders with wholesale business

In this context, the clearest trend of all is that small lenders are losing ground to their larger competitors. Retail vs. wholesale/broker will remain an interesting perspective, but is just a visible effect of the underlying cause: small lender erosion.

Click the image below to access the full report:

Wholesale Leaders