With their slant towards more affluent clients, San Francisco is the perfect market for First Republic Bank. However, it is surprising that FRB dominates this market in the midst of the Trillion Dollar Behemoths.

FRB is relatively tiny at $90BN in assets. They’re 95% smaller than JP Morgan. While FRB leads the market in quantity of loans made, the big banks round out the top 5. These lenders were responsible for more than 38% of all mortgages in 2017.

The year in review

In 2017, there were 27,807 mortgages made in San Francisco by more than 1900 different lenders. They range from major financial institutions like FRB, Citi, JPM, BOA all the way down to parents lending to their children. It’s a diverse set.

The race to win 2018

As of April 10th, the last date we have data, First Republic Bank is leading Wells Fargo 736 to 497, respectively. At this point last year, FRB was leading Wells Fargo, but it was a blowout. FRB had made 1613 mortgage to Wells Fargos 818.

However, complicating the market has been the rise in interest rates. 30 year mortgage rates are up nearly a full percentage point from the bottom of 2017.

So, it makes sense the entire mortgage market has felt the pain. It’s not just the market leaders. At this point in 2017, there were 8,164 mortgage made at this point. This year only 5,832 mortgages have been been made, a decrease of about 28%.

What’s interesting is that the big 5 lenders have felt the pain more than average, and First Republic Bank is getting crushed.

2018 YTD Stats:
FRB -54%
WFC -39%
BOA -31%
JPM -31%
Citi -37%

This is likely due to a number of factors, but I’m betting that the consumer is becoming more price conscious.

Bigger institutional lenders follow a pre-determined formula to determine interest rates with a little wiggle room. At smaller shops, if pressed, they can certainly drop rates much more than the big banks. The loan officer is the one who feels the pricing. A lower interest rate means lower take home pay for a loan officer but some pay is better than no pay, and in a rising interest rate environment, deals are becoming more competitive.

Credit

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Data, as always, courtesy of Local Insights

Mike Hardy

Mike is the founder of Local Insights, a real-time data provider for property records, building permits, and tax assessments

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