It is difficult to answer this question with certainty, but there are some undeniable market developments that have contributed to the rise of such lenders. For example, one explanation is the confluence of several trends:
- a regulatory environment that drives banks to be risk-averse and retreat from lending to riskier borrowers
- an unprecedented rise in computing power and processing speed
- the availability of mobile applications to a wide range of borrowers
- millennials' entry into the mortgage market
- a deliberate strategy on the part of some non-bank lenders to drive volume through technology innovation that produces efficiencies and cost savings while increasing the lender footprint
In 2016, half of the top 10 lenders in the U.S. were non-bank lenders with pure online lending business models or with serious online technology offerings, two were smaller banks with significant correspondent business, and only three were big national banks (see the bar chart for details). In 2017, Quicken Loans announced that it surpassed Wells Fargo in mortgage originations.