Consumer Lending

The U.S. mortgage lending industry totaled $10.5 trillion in loans outstanding at the end of 2007.

Over the last 3 years, the mortgage debt outstanding grew at a 10.3% compound annual growth rate. However, the growth rate has gradually been declining. Annualized growth of mortgage debt was 13.1% in 2005, 11.1% in 2006, and 6.6% in 2007.

There are over 50,000 mortgage brokers in the United States, originating over 50% of mortgage loans. Thousands of banks originate home loans and home equity lines of credit. However, the mortgage lending industry is largely dominated by Fannie Mae and Freddie Mac, with Fannie Mae having $2.8 trillion in mortgage debt held or securitized at the end of 2007 and Freddie Mac having $2.1 trillion (or 23.8% and 17.8% of the total mortgage debt outstanding, respectively).

$2.4 trillion in new single-family mortgages were originated in 2007, down from $3.0 trillion in 2006 and $3.1 trillion in 2005. Total originations by the mortgage lending industry may drop below $2 trillion in 2008 due to slowing economic growth, falling home prices, and the continuing credit crunch which has resulted in more stringent approval criteria for mortgage applications than in recent years.

Approximately 21% of mortgage originations in recent years were subprime mortgages, up significantly from 9% of total originations from 1996 through 2004.

This post uses data from various government publications, the Mortgage Bankers Association, Moody’s, and the National Association of Mortgage Brokers.

The analysis on the size of the consumer lending industry has been updated.

Consumer credit rose $15.3 billion in March to $2.56 trillion, an increase of 7.2% (annualized).

Credit cards and other revolving debt rose $6.3 billion, while installment debt rose $9 billion from the prior month.

Consumer credit release