“I think it boils down to one very simple thing, and that is what rates they will be offering,” she said. “My clients obviously want to make sure that it’s a reputable bank or lending institution that they’re borrowing from.
“But people care mostly about the rate and about the terms of the loan, and buyers will gravitate to wherever they’re going to be able to get the best deal – be it a bank or a nonbank.”
Bowman speech ‘doesn’t mean there’s going to be a major shift’
In her mid-February speech in Orlando, Bowman noted a big drop in the percentage of mortgages originated by the banking sector since the global financial crisis of 2007-08.
Then, banks accounted for about 60% of originations, she said, with servicing rights on around 95% of mortgage balances. But that market share has since dimmed to 35% of originations and 45% of servicing rights.
Bowman said the central bank wants to address that decline through two moves: firstly, removing the requirement that banks deduct MSRs from regulatory capital, while keeping a 250% risk weight and seeking comment on its appropriateness.