Part 1 of this series will examine fundamental shifts in mortgage credit providers and loan programs serving racially and ethnically diverse communities. It will also track the rise of non-bank lenders, changing distribution of loan purposes and how government backed programs remain crucial for many borrowers of color despite declining overall market share.
Jason Richardson, Senior Director, Research, NCRC
Key Takeaways
1
Non-banks exempt from Community Reinvestment Act (CRA) oversight now make an outright majority of mortgages nationwide. Non-bank mortgage companies now originate 53.3% of all home loans (up from 44.6% in 2018), while bank market shares have fallen from 42.5% to 30.1%. This shift thwarts Congress’s attempts to drive loan capital into communities that were historically fenced out of the financial services system, because non-bank lending is not accountable to regulators under the CRA.
2
Two-thirds of mortgages to purchase a new home were made by non-bank lenders in 2024. Different institutions dominate specific loan types with mortgage companies leading in home purchases (66.1%) and cash out refinances (67.3%). Banks maintain strength in home improvement loans (48.2%) and equity loans (42.6%).
3
Total mortgage lending has collapsed dramatically since the COVID-19 pandemic. Loan originations plummeted from a peak of 16.8 million in 2021 to just 4.6 million in 2023, with refinancing collapsing by over 90% from pandemic peaks.
4
Institution Specific Trends: Credit unions show the strongest reliance on conventional lending (96.6%), compared to banks (90.5%) and mortgage companies (60.6%), which utilize government-backed programs more frequently.
Discussion
The mortgage market has undergone significant structural changes since 2018, reflecting both pandemic-related economic shifts and longer term trends in financial services. The 30-year fixed mortgage rate in the United States has experienced significant volatility over the past 25 years, starting around 8% in 2000, then dropping to historic lows of under 3% during the height of the 2020-2021 COVID-19 pandemic era. It then climbed sharply to peak at nearly 8% in late 2023, before moderating to around 6.8% by early 2025.
Non-bank mortgage companies have emerged as the dominant force in home lending, particularly for home purchases and cash-out refinances. They have increased their market share from 44.6% in 2018, experiencing a peak of 60.8% in 2021 before settling at 53.3% in 2024.
This fundamental shift in who provides mortgage credit to American homebuyers threatens to undermine efforts to close economic opportunity gaps along race and class lines. This shift means that lenders can sidestep critical consumer protections, like the Community Reinvestment Act (CRA).
Banks have seen their overall market share decline substantially from 42.5% in 2018 to just 30.1% by 2024. However, banks still continue to play an important role in home improvement and equity lending. Meanwhile, credit unions have grown their presence from 13.0% to 16.6% over the same period, showing resilience during market fluctuations. Credit unions, however, are also not subject to the same CRA oversight as traditional banks.
The COVID-19 pandemic created unprecedented volatility in lending activity. Total loan originations more than doubled between 2019 and 2021, reaching historic peaks of 16.8 million loans driven by historically low interest rates. As rates climbed post-pandemic, lending contracted sharply to 6.7 million originations in 2022 and just 4.6 million in 2023. Despite these extreme volume swings, the origination rate (percentage of applications resulting in loans) remained surprisingly stable, suggesting lending standards stayed consistent throughout the market turbulence.
Different types of lenders have developed specialized niches within the mortgage ecosystem, as shown in the charts below. While all institutions experienced significant drops in volume since 2021, their composition of loan types reveals distinct business models and market approaches.
The composition of mortgage lending has shifted significantly since 2018, with refinancing activity dominating during the 2020-2021 period before sharply declining. The chart below quantifies this dramatic volume change, where total lending peaked near 12 million units during the 2020-2021 period before falling to approximately 5 million units by 2023 (less than half the peak volume).
Home purchases (shown in gray) have maintained the most consistent volume throughout this period, while refinance activity (shown in blue) experienced the most pronounced boom and bust cycle, driving both the overall market expansion and subsequent contraction. This volume data reinforces our findings about the unprecedented market volatility during and after the pandemic period.
Banks maintained a heavy emphasis on providing conventional loans, which make up 83.5% of their home purchase lending. This conventional loan focus has remained consistent even as overall volumes declined dramatically after 2021.
Credit unions represent a third distinct category in the mortgage lending landscape, although they handle the smallest overall volume of loans compared to banks and mortgage companies. What makes credit unions stand out is their overwhelming focus on conventional lending, which makes up 88.1% of their home purchase mortgage activity and 96.6% of all of their lending. They use government-backed loan programs, such as FHA loans and Rural Housing Service (RHS) housing assistance programs, less frequently than any other lender group.
There is one notable exception to this pattern: Veterans Affairs (VA) loans for military service members and veterans. A single institution – Navy Federal Credit Union (NFCU) – dominates this specialized market, accounting for 76% of all VA loans issued by credit unions in 2024. This concentration shows how one large credit union has carved out a specific niche serving military members, while most other credit unions primarily stick to conventional lending.
The data reveals significant disparities in how different institutions access the mortgage market. Government-backed programs (i.e., FHA, VA, RHS, etc.) remain crucial for many borrowers despite their declining overall market share. In 2024, while 78.3% of all home purchase mortgages were conventional loans, the remaining 21.7% of government-backed loan programs played an outsized role in serving many communities.
Recent policy changes have affected investor confidence, pushing bond yields to higher rates and increasing mortgage costs. The housing market remains central to these long term shifts, with lending activity both reflecting and influencing broader economic trends.
Policy Solutions
1
Extend CRA Requirements to Non Bank Lenders
Given recent efforts to weaken federal fair lending protections, and the increasingly dominant role of less-supervised lenders in the mortgage market, states must defend their residents through these expanded CRA frameworks. Implementing state-level Community Reinvestment Act legislation similar to current models operating in Massachusetts, New York and Illinois would cover all mortgage lenders, including now dominant non-bank institutions. Previous NCRC studies have shown that state CRA laws effectively increased lending to underserved communities and provide crucial accountability mechanisms for lending institutions.
2
Defend Down Payment Assistance Programs
Policymakers should fight to preserve home mortgage down payment assistance programs for low-income homebuyers, which are currently under attack from federal regulators. Recent directives have forced government-sponsored enterprises (GSEs) to terminate programs helping borrowers with limited savings. State and local governments must maintain these vital pathways to homeownership while advocating for federal policy reversals. As interest rates have risen, borrowers need these funds to more effectively buy down their rates as well.
3
Defend CFPB Enforcement
Policymakers should resist attempts to dismantle the Consumer Financial Protection Bureau (CFPB), which has faced recent operational challenges under acting leadership. State-level public servants need to remain vigilant against the potential relaxation of consumer protections that will enable discriminatory lending practices.
Resources
For the complete series, including videos, interactive visualizations and localized market analysis, visit our 2025 Mortgage Market series homepage . NCRC members can request customized community data requests as well. Those interested in membership benefits should contact Ralph Cyrus (Membership Engagement Specialist) at rcyrus@ncrc.org.
Mortgage Market Series
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