Nest egg: Rising disposable income is expected to increase demand for and revenue from real estate loans
Real Estate Loans & Collateralized Debt in California
The Real Estate, Loans and Collateralized Debt industry in California is one of the largest state segments of the national industry, in terms of revenue. Over the five years to 2017, the industry has exhibited modest growth as the state's various real estate markets have slowly recovered from the subprime mortgage crisis. Although surging home prices in the Golden State have kept many households from purchasing properties, high-income Californians have largely made up the slack, contributing to growth in the total number of mortgages originated for residential properties. Meanwhile, the Federal Reserve has started to increase the federal funds rate to prerecessionary levels as the national economy has grown. Operators earn interest income on their loans, so growth in interest rates has enabled them to accrue more revenue. The Real Estate, Loans and Collateralized Debt industry in California is projected to strengthen over the five years to 2022, anchored by growing demand for real estate loans. For example, per capita disposable income in California is projected to grow more rapidly compared with the previous five-year period, enabling households to better afford purchases of real estate. Additionally, the Federal Reserve is projected to continue raising the federal funds rate to offset rising inflation, enabling operators to garner higher interest spreads on their loans.
The industry comprises nondepository operators that specialize in lending activity in California. Unlike banks and other traditional lenders, operators do not rely on deposits to issue loans. Instead, nondepository operators provide lending services by selling securities, such as bonds, notes and stock or insurance policies, to the public. In addition to direct lending, industry operators also generate income by securitizing and selling mortgages and other loans on the secondary market.
This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.
Table of Contents
Companies Mentioned (Partial List)
A selection of companies mentioned in this report includes, but is not limited to:
- Federal National Mortgage Association
- Federal Home Loan Mortgage Corporation
- American Advisors Group
- HomeBridge Financial Services Inc.
Methodology
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