As our last report covering 2010, it makes sense that we put a bottom line on the biggest trend of the year. And while some would say that 2010 was all about volume declines (and volume did indeed decline -35% across the industry), we would offer consolidation as the less obvious but equally significant story. We all prefer to see growth, but in a year of volume declines the only hockey stick to be found is in top 10 lender market share.
We’ve regularly discussed the decline in active lenders (-47.2% from Dec 2009 to Dec 2010), and this time we’ll look at it slightly differently. The graph below shows the collective market share (not including wholesale) of the top 10 reverse mortgage companies by volume (including brokers and lenders).
Whereas 2009 essentially ended where it began in terms of top 10 market share, 2010 was an entirely different story. The top 10 lenders have grown as a share of retail volume from 40.5% in January 2010 to 64.7% in December. Clearly, the higher volume companies did not suffer 2010 in the same fashion as smaller brokers and lenders.
We’d be remiss if we discussed top 10 market share consolidation without acknowledging the number 2 lender’s recent decision to exit the business. It’s tempting to paint that as a counter-point to the trend of consolidation, and indeed, BofA’s exit is likely to move the top 10 market share back down without another massive brand and distribution network to replace them. American Advisors Group is number 11 on the December list and can’t replace BofA’s volume in the top 10.
Despite that exit, the trend of fewer, larger lenders is intact and looks set to continue for the foreseeable future. With many cross currents still buffeting our business, let’s hope 2011 provides some growth hockey sticks in at least some niches of the business (Saver, ARM) instead of just further consolidation.
Click on the image below to view the full Industry Trends report for this month.