Who Rules the Jumbo Mortgage Lending Market?

The top mortgage lenders enjoyed the fruits of their labors in 2015 as the jumbo-mortgage market reached new highs. With mortgage rates in 2016 remaining low and even dropping in some areas, it's supposed to be another good year for this market. That said, a rise in rates by the Federal Reserve could put a slight damper on growth.

Continued volatility in the U.S. stock market could also have an impact on this sector, as buyers may find themselves with less cash available for luxury purchases. Still, some investors may decide to shift more of their assets into real estate, believing it to be a safer bet than the stock market.

A jumbo mortgage is typically a home loan that exceeds the conforming loan limits established by regulators of $417,000 in most places and $625,500 in some high-cost areas. This year, 2,916 counties have a regulatory limit of $417,000, while 108 counties have a loan limit of $625,500. Many of those counties are located in high-cost housing markets like Los Angeles, New York and San Francisco.

In 2015, mortgage lenders provided an estimated $320 billion in jumbo mortgage financing, comprising 19% of all mortgage lending. That’s 1% higher than in 2014, according to the publication Inside Mortgage Finance. Read on for a quick landscape of who rules the market as well as how it's shaking out for 2016. (For related reading, see: A Quick Guide to Jumbo Mortgages.)  

Leaders of the Pack

This year, the top mortgage lenders include Wells Fargo Mortgage, JPMorgan Chase Mortgage, Quicken Loans, CitiMortgage, Bank of America and US Bank Mortgage, according to a list compiled by AdvisoryHQ, an online media company that provides research, independent reviews, and rankings.

Wells Fargo, which topped the list of largest mortgage loan providers in the U.S., recently upgraded its online platform, the Wells Fargo Home Mortgage platform. The lender now offers advanced loan processing capabilities, allowing users to more easily apply for and track loan applications online. It also offers customers use of its enhanced origination, loan processing, and closing tool.

Chase also ranked as one of this year’s largest mortgage lenders, based on the total amount of loans it provides to U.S. consumers. The bank has reported a mortgage banking net income of $602 million, representing 29% increase from the previous period. Chase reported a total of $172 billion in owned mortgage loans in its third quarter balance sheet statement, which does not include the hundreds of billions of dollars' worth of mortgage loans that it sells to Fannie Mae/Freddie Mac or that it repackages and sells to investors. Other areas that helped Chase score so high on the list were the wide range of programs and promotions it offers borrowers and its reported easy-to-use application platform. (For related reading, see: 3 Reasons Why Jumbo Mortgages Are for High Earners.)

Quicken Loans, another top performer on the list, offers mortgages across every state and has become the largest online retail mortgage lender. According to National Mortgage News, more than two million American families finance their homes with a Quicken Loan. In 2016 alone, Quicken Loans has closed over $85 billion in mortgage loans. The lender also aims to close a majority of its loans within 30 days.

Inventory Is Plentiful

As we reach the halfway mark of 2016, these lenders will surely continue to close on a hefty number of jumbo mortgage loans. According to the National Association of Realtors, the inventory of U.S. homes priced from $500,000 to $750,000 rose 15.9% in March, compared with the same period last year. The inventory of homes priced over $1 million also rose 12.6% year over year. Still, real estate agents see slower a movement of high-priced homes vs. midrange and lower-priced ones, but inventory varies widely depending on the location. 

The Bottom Line

With interest rates remaining low and prices for luxury home dropping in some areas, the jumbo mortgage market is likely to remain robust. (For related reading, see: 5 Risky Mortgage Types to Avoid.)