Limited inventory of homes for sale and rising interest rates have put a damper on mortgage activity, forcing lenders to compete more aggressively for borrowers.
But housing conditions vary by city and so too does the intensity of lender competition. One key indicator of the competitive landscape in a city is the market share concentration among the area's top 10 lenders. Less concentration leaves more room for other lenders to battle for borrowers.
And while the most competitive metros may create hurdles for the mortgage industry, these are often areas where borrowers will find the best deals, as lenders conjure up ways to incentivize consumers.
To determine how lender competition stacks up across the country, LendingTree used 2017 Home Mortgage Disclosure Act data to generate Herfindahl-Hirschman Index values for the mortgage industry. The HHI is a widely accepted statistical formula for measuring market concentration in an industry. Scores range from nearly zero to 10,000; the lower the number, the more competitive the industry.
Nationwide, the mortgage industry is relatively competitive, with an HHI score of 521. But some markets saw HHI values as low as 143, suggesting competition was much tighter in these areas.
When broken down by loan type, some metros were particularly competitive in the conventional mortgage space while others saw stronger competition for Federal Housing Administration loans. FHA markets are on average more competitive than conventional markets.
Some of the most expensive real estate markets are among the least competitive for conventional loans, but also among the most for FHA loans.
From Boston to San Antonio, here's a look at the 12 most competitive mortgage markets, ranked by the competitiveness of the overall lending activity. The data for the rankings is derived from LendingTree's HHI calculations and also includes breakouts of conventional and FHA lending competitiveness.
Baltimore, Maryland - July 24, 2013: Colorful early 19th century homes line Montgomerey Street in the Federal Hill Historic District
Picasa/lspi138 - Fotolia
No. 12 Baltimore, Md.
Overall HHI value: 168 Conventional HHI value: 197 Market share of top 10: 38% FHA HHI value: 210 Market share of top 10: 37%
Evening light on on distant mountains and the city of Riverside, from Mount Rubidoux Park, in Riverside, California.
jonbilous - stock.adobe.com
No. 11 Riverside, Calif.
Overall HHI value: 166 Conventional HHI value: 207 Market share of top 10: 41% FHA HHI value: 185 Market share of top 10: 38%
Lori Martin - stock.adobe.com
No. 10 Tyler, Texas
Overall HHI value: 164 Conventional HHI value: 204 Market share of top 10: 41.3% FHA HHI value: 334 Market share of top 10: 45.7%
Orlando skyline fom lake Eola in Florida USA
TONO BALAGUER/lunamarina - stock.adobe.com
No. 9 Orlando, Fla.
Overall HHI value: 164 Conventional HHI value: 204 Market share of top 10: 38% FHA HHI value: 198 Market share of top 10: 38%
jedphoto - stock.adobe.com
No. 8 Louisville, Ky.
Overall HHI value: 163 Conventional HHI value: 192 Market share of top 10: 38% FHA HHI value: 247 Market share of top 10: 41%
unknown/Dave Newman - stock.adobe.com
No. 7 Nashville, Tenn.
Overall HHI value: 161 Conventional HHI value: 194 Market share of top 10: 36% FHA HHI value: 186 Market share of top 10: 36%
Delmas Lehman - Fotolia
No. 6 Tampa, Fla.
Overall HHI value: 158 Conventional HHI value: 191 Market share of top 10: 36% FHA HHI value: 219 Market share of top 10: 40%
Exterior view of the historic Alamo shortly after sunrise
Dean Fikar/dfikar - Fotolia
No. 5 San Antonio, Texas
Overall HHI value: 158 Conventional HHI value: 216 Market share of top 10: 40% FHA HHI value: 187 Market share of top 10: 39%
BOSTON, MA, USA - JUNE 28, 2017: Aerial image of Fenway Park sports stadium home to the Boston Red Socks
Felix Mizioznikov - stock.adobe.com
No. 4 Boston, Mass.
Overall HHI value: 157 Conventional HHI value: 171 Market share of top 10: 35% FHA HHI value: 210 Market share of top 10: 42%
Connecticut state capitol and surrounding lawn which is located in Hartford, CT, USA.
Steven Frame/sframe - stock.adobe.com
No. 3 Hartford, Conn.
Overall HHI value: 155 Conventional HHI value: 173 Market share of top 10: 37% FHA HHI value: 229 Market share of top 10: 43%
Providence, Rhode Island. City view in New England region of the United States.
Marek SLUSARCZYK/Tupungato - stock.adobe.com
No. 2 Providence, R.I.
Overall HHI value: 147 Conventional HHI value: 161 Market share of top 10: 34% FHA HHI value: 241 Market share of top 10: 43%
Worcester, Massachusetts, USA at Worcester Common.
SeanPavonePhoto - stock.adobe.com
No. 1 Worcester, Mass.
Overall HHI value: 143 Conventional HHI value: 154 Market share of top 10: 30.6% FHA HHI value: 240 Market share of top 10: 43.1%
While some industry forecasts predicted origination volumes would fall 7% quarter-to-quarter in 4Q, early earnings numbers from Wells Fargo, JPMorgan Chase, Citi and PNC Bank show they were down just 3% when purchased loans are excluded.
The FHFA and Treasury will allow Fannie Mae and Freddie Mac to hold more capital as part of the Trump administration's plans to release the companies from conservatorship. But it is unclear whether the incoming Biden administration will keep the mortgage giants on the same reform path.