Three banks underwrite 3 out of every 5 mortgages. Such bank concentration won't benefit consumers in the long run.
According to Mortgagestats.com, three banks accounted for 58.5% of the mortgage volume in the final quarter of 2009. The three are Wells Fargo, Bank of America and JPMorgan Chase.
This concentration of mortgage volume in only three banks has the markings of a cartel. A cartel is a group of companies which collectively attempt to affect market production and competition with the end result being greater control of the supply and price of certain goods or services.
This is an example of a market failure that eventually harms the consumer. Interest rate pricing and product availability are in the hands of a very few. This limits the competition which usually drives prices up and product availability and quality of services down.
It pays to support mortgage bankers and brokers; they have given us the ability to be more selective in our choice of mortgage products and services, thereby, retaining competition in a free market place.
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