52231 Loan Brokers in the US Industry Report

Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM On the money: Rising interest rates and competition will slow industry growth This report was provided to Seattle Pacific University (2134440152) by IBISWorld on 03 December 2019 in accordance with their license agreement with IBISWorld IBISWorld Industry Report 52231 Loan Brokers in the US May 2019 Nick Masters About this Industry 17 International Trade Industry Definition 18 Business Locations Main Activities Similar Industries 20 Competitive Landscape 30 Industry Data Additional Resources 20 Market Share Concentration 30 Annual Change 20 Key Success Factors 30 Key Ratios 20 Cost Structure Benchmarks 31 Industry Financial Ratios Industry at a Glance 29 Industry Assistance 30 Key Statistics 22 Basis of Competition Industry Performance 23 Barriers to Entry Executive Summary 23 Industry Globalization Key External Drivers Current Performance 32 Jargon & Glossary 24 Major Companies 10 Industry Outlook 24 LendingTree Inc 12 Industry Life Cycle 25 HomeServices of America 14 Products and Markets 26 Operating Conditions 14 Supply Chain 26 Capital Intensity 14 Products and Services 27 Technology and Systems 15 Demand Determinants 27 Revenue Volatility 16 Major Markets 28 Regulation and Policy www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM About this Industry Industry Definition This industry is composed of establishments that arrange loans, especially mortgages, by bringing borrowers and lenders together on a commission or fee basis Main Activities The primary activities of this industry are Brokering residential mortgages Brokering commercial and industrial mortgages Brokering home equity loans Brokering equipment financing arrangements Brokering vehicle loans The major products and services in this industry are Brokering and dealing products Commercial and industrial mortgages Home equity loans Loans to governments Residential mortgages – multifamily residences Residential mortgages – one- to four- family residences Vehicle loans Other Similar Industries 52212 Savings Banks & Thrifts in the US Operators in this industry primarily accept and loan out deposits to provide loans for consumers and businesses 52213 Credit Unions in the US Operators in this industry are member-owned and provide banking services to these same members 52219 Industrial Banks in the US Operators in this industry are financial institutions authorized to make consumer and commercial loans and to accept federally insured deposits 52221 Credit Card Issuing in the US Operators in this industry provide credit through the issuance of credit cards 52222 Auto Leasing, Loans & Sales Financing in the US Operators in this industry provide sales financing and generate revenue through interest and fees from borrowers Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM About this Industry Additional Resources For additional information on this industry www.mba.org Mortgage Bankers Association www.namb.org The National Association of Mortgage Brokers www.hud.gov The US Department of Housing and Urban Development IBISWorld writes over 1000 US industry reports, which are updated up to four times a year To see all reports, go towww.ibisworld.com Provided to: Seattle Pacific University (2134440152) | 03 December 2019 WWW.IBISWORLD.COM Loan Brokers in the US May 2019   Industry at a Glance Loan Brokers in 2019 Key Statistics Snapshot Revenue Annual Growth 14–19 Annual Growth 19–24 Profit Wages Businesses $13.5bn 11.2% $2.4bn $4.7bn House price index Revenue vs employment growth Market Share LendingTree Inc 7.1% 60 250 225 Index 40 % change 3.0% 11,410 20 200 175 150 -20 Year 11 13 15 Revenue 17 19 21 23 125 Year 11 25 13 15 17 19 21 23 25 Employment SOURCE: WWW.IBISWORLD.COM p 24 Products and services segmentation (2019) 0.1% Key External Drivers 6.8% House price index Loans to governments 30-year conventional mortgage rate 4.7% Other Commercial and industrial mortgages 7.1% 0.2% Brokering and dealing products External competition for the Loan Brokers industry 0.7% Home equity loans Vehicle loans 9.0% Housing starts Residential mortgages multifamily residences Per capita disposable income 71.4% Residential mortgages one- to four-family residences p SOURCE: WWW.IBISWORLD.COM Industry Structure Life Cycle Stage Mature Regulation Level Heavy Revenue Volatility High Technology Change Low Capital Intensity Low Barriers to Entry Low Industry Assistance Low Industry Globalization Low Concentration Level Low Competition Level High FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 30 Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM Industry Performance Executive Summary   |   Key External Drivers   |   Current Performance Industry Outlook   |   Life Cycle Stage Executive Summary The Loan Brokers industry is expected to expand over the five years to 2019 as access to credit and consumer incomes continue to rise Favorable economic conditions and low interest rates have fueled consumer spending over the past five years, with purchases of homes and cars boosting demand for mortgages and auto loans As household spending on big-ticket items increases, demand for loan brokering services is forecast to rise As a result, industry revenue is projected to grow an annualized 11.2% to $13.5 billion over the five years to 2019 However, recent upticks in interest rates are expected to temper The industry has been a major beneficiary of strong consumer confidence demand for mortgages and auto loans this year; consequently, IBISWorld projects industry revenue to grow only 0.8% in 2019 alone Consumer loans activity is primarily dependent on household income levels, corporate profit and housing prices Over the five years to 2019, household incomes have increased due to declining unemployment and recent tax cuts Moreover, per capita disposable income and consumer spending levels, both indicative of consumers’ willingness to spend, have been on the rise during the Key External Drivers House price index Residential housing prices heavily influence demand for housing credit Demand for mortgage brokers increases when home prices rise because purchasing a home is considered to be a good investment and typically requires consumers to take out additional credit Furthermore, housing prices generally follow cyclical trends, and demand for loan brokers increases with improving five-year period The Loan Brokers industry has been a major beneficiary of strong consumer confidence, as consumer loans represent the largest source of industry revenue Additionally, the industry has become more profitable as online loan brokering services have gained significant influence Average industry profit margins, measured as earnings before interest and taxes, are expected to account for 17.7% of industry revenue in 2019, up from 15.4% in 2014 The Loan Brokers industry is expected to continue expanding over the five years to 2024 Among the most prominent tailwinds affecting the industry is the 2018 passage of the Economic Growth, Regulatory Relief and Consumer Protection Act This legislation serves to amend previously restrictive mortgage lending practices and is expected to further encourage lending activity in the coming years However, the industry is expected to endure several headwinds Over the five years to 2024, interest rates are expected to increase, and as a result, mortgages will become less attractive to consumers Moreover, external competition from commercial banks is expected to continue, as certain restrictions under the Dodd-Frank Act have been pulled back Nevertheless, IBISWorld projects industry revenue to increase at an annualized rate of 3.0% to $15.7 billion over the five years to 2024 macroeconomic variables The house price index is expected to increase in 2019, representing a potential opportunity for the industry 30-year conventional mortgage rate The 30-year conventional mortgage rate is traditionally the interest rate at which borrowers can receive credit for purchasing a home When mortgage rates fall, the cost of borrowing declines, thus Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM Industry Performance increasing home purchases and demand for loan brokerage services The 30-year conventional mortgage rate is expected to decrease in 2019 External competition for the Loan Brokers industry Loan brokers experience competition from other mortgage brokerage institutions, including commercial banks and some government organizations These institutions offer a wider range of services and are increasingly attempting to bypass the industry during the mortgage origination process External competition for the Loan Brokers industry is expected to increase in 2019, posing a potential threat to the industry Housing starts The number of housing starts serves as a measure of the amount of new residential construction in the United States A larger stock of homes in the United States creates more opportunities for industry operators to provide brokerage services during the mortgage origination process The number of housing starts is expected to increase in 2019 Per capita disposable income Per capita disposable income levels largely determine a household’s ability to repay a loan Additionally, income levels influence the decision of a household to enter into mortgages or other consumer loans in the first place Per capita disposable income is expected to increase in 2019 30-year conventional mortgage rate House price index 250 5.5 225 5.0 200 % Index Key External Drivers continued 4.5 175 4.0 150 125 Year 11 13 15 17 19 21 23 25 3.5 Year 11 13 15 17 19 21 23 25 SOURCE: WWW.IBISWORLD.COM Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM Industry Performance Current Performance The Loan Brokers industry primarily engages in arranging loans between borrowers and lenders Brokerages serve the needs of both consumers and businesses, with mortgage brokering comprising the majority of industry activity Historically, the industry has grown in line with the US economy, despite turbulence during the housing crisis of 2008 In more recent years, the Loan Brokers industry has benefited from increased consumer confidence and favorable interest rates Moreover, increased activity in the housing market has served as clear evidence of rising consumer demand Over the five years to 2019, these trends are expected to bolster industry revenue IBISWorld projects industry revenue to increase an annualized 11.2% to $13.5 billion during the five-year period However, due to rising interest rates and increasing levels of investor uncertainty, IBISWorld projects the industry’s expansion to slow to meager revenue growth of 0.8% in 2019 alone Consumer confidence Consumer confidence plays a major role in the success of the Loan Brokers industry, as consumers’ perceptions of their wealth and income levels ultimately drive their decisions to make large purchases requiring a loan (i.e buying a house or a new car) Over the past five years, consumer confidence has increased primarily due to strong growth in corporate profit and capital markets IBISWorld estimates the Consumer Confidence Index and per capita disposable income to increase an annualized 7.5% and 2.2%, respectively, over the five years to 2019 These trends have been a boon to the Loan Brokers industry, since loans to consumers account for over 80.0% of industry revenue, with auto loans and mortgages making up the majority of consumer loans Rising consumer spending has driven up demand for loan broker services, as consumers are gradually committing to larger purchases Economic climate In addition to consumer confidence levels, the Loan Brokers industry is reliant upon interest rates and the overall economic climate that influences them Over the five years to 2019, the Federal Reserve has gradually raised interest rates in response to falling unemployment and rising inflation Demand for loans is particularly sensitive to interest rates charged by lending institutions, and loan brokers experience decreased demand for their services when the cost of borrowing increases Nonetheless, interest rates have remained historically low for a prolonged period of time as the Federal Reserve continues to encourage economic growth Moreover, rates have stayed relatively consistent with the 30-year conventional mortgage rate, which is expected to remain attractively low at 4.4% in 2019, up slightly from 4.2% in 2014 Low interest rates, combined with falling unemployment and growing capital markets, have set the stage for a thriving housing market and thus strong demand for mortgages Industry revenue 60 % change 40 20 -20 Year 11 13 15 17 19 21 23 25 SOURCE: WWW.IBISWORLD.COM Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM Industry Performance Housing market Low interest rates and rising consumer incomes have resulted in a burgeoning housing market Over the five years to 2019, housing starts (or new, privately owned housing units beginning construction) are estimated to increase an annualized 4.9% to 1.3 million units Growth in the housing market is largely representative of increased demand from US home buyers, with first-time home buyers expected to represent the secondlargest market for the Loan Brokers industry First-time home buyers accounted for 34.0% of all home buyers in 2018 (latest data available) according to the National Association of Realtors First-time home buyers are also more likely to seek out loan brokerage services than existing homeowners, as most existing homeowners are more familiar with the loan process and likely already have an established relationship with a lender Overall, a thriving housing market has led to an increase in demand for loan brokerage services as first-time home buyers have increasingly sought out mortgage options Regulation Financial regulation plays a major role in how the Loan Brokers industry receives compensation for its services Increased regulation has historically tempered industry revenue, as new regulation imposes greater compliance costs and changes in operations that undercut revenue gains In January 2013, just prior to the current period, the Consumer Financial Protection Bureau finalized regulations originated by the Federal Reserve Board and the Dodd-Frank Wall Street Reform and Consumer Protection Act that influenced industry revenue significantly As of January 2014, brokers have no longer been able to receive compensation based on the terms and conditions of a mortgage; mortgage brokers are now only paid by lenders on the basis of the number of loans they originate and the amount of credit they extend However, the Economic Growth, Regulatory Relief, and Consumer Protection Act passed in 2018 has largely eased the regulatory landscape pertaining to mortgage lending practices For example, the legislation amends the mortgage disclosure waiting period required in the Truth in Lending Act (TILA), enabling consumers to take advantage of lower interest rates sooner Additionally, the act eases TILA’s abilityto-pay restrictions on depository institutions and credit unions, effectively reducing the regulatory costs associated with consumer lending practices for small lenders Overall, as regulatory compliance costs decline, consumer access to credit will improve and demand for loan brokerage services will increase Industry operations The Loan Brokers industry has experienced faltering participation during the five-year period, with its number of establishments and enterprises growing only slightly This trend can be attributed to a falling number of nonemployers and the increasing prevalence of online loan brokerage services Despite recent growth in employer operations, nonemployers have been shutting down their operations in droves, increasingly Growth in the housing market is largely representative of increased demand Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   WWW.IBISWORLD.COM Industry Performance Industry operations continued unable to endure heightened external competition, severe revenue volatility and burdensome compliance costs However, a modest increase in employer establishments has helped mitigate the effects of nonemployer exits, as larger enterprises are better positioned to handle such challenges Overall, IBISWorld estimates industry establishments to increase at a marginal annualized rate of 1.3% to 12,533 locations over the five years to 2019 Additionally, industry employment and wages have picked up over the past five years Industry employment is expected to increase an annualized 4.0% to total 49,880 workers Meanwhile, industry wages are expected to increase an annualized 9.8% over the five years to 2019 These trends are indicative of increased competition, particularly from commercial banks, as industry operators raise wages to further attract and retain broker talent Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   10 WWW.IBISWORLD.COM Industry Performance Industry Outlook Over the five years to 2024, the Loan Brokers industry is expected to benefit from deregulation and continued growth in the housing market However, an expected increase in interest rates will slow consumer demand for mortgages and auto loans in the coming years Moreover, continued competition from commercial banks offering Deregulation In 2017, the Trump Administration proposed rollbacks on the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act In May 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act became law, marking the first step toward deregulation since the financial crisis Deregulation of lenders in the United States will enable lenders to extend loans to less creditworthy applicants Proposed deregulation will prove beneficial for the Loan Brokers industry as lenders will be able to offer a greater variety of loan products that appeal to a wider range of consumers An increase in mortgage products, for example, will lead to an increase in demand for loan brokers as consumers seek the best loans for their needs Deregulation will also intensify both internal and external competition, as commercial banks will be further incentivized to increase direct-to-consumer lending activity Nonetheless, the overall effect of financial deregulation is expected to be beneficial for the Loan Brokers industry over the five years to 2024 Although the housing market is expected to continue growing over the next five years, increasing interest rates and rising home prices will curb overall growth in industry revenue Over the five years to 2024, the house price index is projected to increase an annualized 2.3%, while the 30-year conventional mortgage rate is expected to increase an annualized 2.2% to a rate of 4.9% Rising house prices and interest rates will likely deter some consumers However, overall consumer incomes are also expected to increase over the next five years, albeit at a more modest pace IBISWorld forecasts per capita disposable income to rise an annualized 1.5% over the five years to 2024 Consumers are expected to benefit from an overall positive economic outlook, with both corporate profit and consumer spending anticipated to increase in line with housing prices and interest rates Although consumer income levels are expected to grow moving forward, consumer confidence is projected to weaken relative to the previous five-year period Investor uncertainty rose in 2018 and is expected to rise further over the coming years as the interest rate Limited recovery competitive rates will place pressure on industry profit margins As a result of these trends, the Loan Brokers industry is expected to grow at a slower rate than in the current five-year period IBISWorld forecasts industry revenue to increase at an annualized rate of 3.0% to $15.7 billion over the five years to 2024 Although deregulation will intensify competition, it is expected to benefit the industry overall Provided to: Seattle Pacific University (2134440152) | 03 December 2019 WWW.IBISWORLD.COM Loan Brokers in the US May 2019   20 Competitive Landscape Market Share Concentration   |   Key Success Factors   |   Cost Structure Benchmarks Basis of Competition   |   Barriers to Entry   |   Industry Globalization Market Share Concentration Level Concentration in this industry is L ow Key Success Factors IBISWorld identifies 250 Key Success Factors for a business The most important for this industry are: Cost Structure Benchmarks The Loan Brokers industry operates with a low level of market share concentration; the top two companies are estimated to account for less than 10.0% of total industry revenue in 2019 The industry is highly fragmented, with an estimated 11,410 enterprises in 2019 Big banks are increasingly excluding brokers from the mortgage origination process; these trends are placing increased pressure on industry operators to consolidate Larger brokerages can dominate local markets by attracting successful brokers that will benefit from shared marketing costs and larger client lists Additionally, given the damage incurred to the industry’s reputation by the subprime mortgage crisis, large and established operators have a competitive advantage with respect to borrower confidence, further explaining the continuing decline of nonemployer enterprises Furthermore, lenders prefer to deal with larger brokerages, potentially leading to exclusive partnerships between select industry operators and loan providers Must comply with government regulations Loan brokers must comply with both state and federal legislation to operate These regulations include the need to pass licensing exams and criminal background checks and compliance with new compensation restrictions Having a good reputation A broker’s reputation is strengthened by the provision of honest and unbiased advice, which motivates satisfied borrowers and lenders to recommend the broker’s services This has been particularly important since the fallout caused by the subprime crisis Having relationships with lenders Maintaining relationships with lenders can lead to guaranteed sources of revenue and smooth fee and commission fluctuations caused by changes in the housing environment Possession of localized knowledge As most brokers operate on a local or regional basis, it is important for operators to have strong knowledge of the local real estate market and its trends to meet the specific needs of their clients Marketing of differentiated products Loan brokers of all experience levels need to expand their client lists to increase revenue It is vital for brokers to have strong marketing skills to effectively advertise their business, expertise and services Access to a highly skilled workforce It is important for mortgage brokers to be well versed in multiple types of loans and amortization schedules Having a formal education in finance, economics, accounting or real estate can give brokers an edge when assisting clients The cost structure for the Loan Brokers Industry is characterized by high wage costs in addition to high other expenses (usually resulting from transaction fees and one-time expenses) However, the industry’s profitability remains high given the industry’s low fixed and variable costs as represented by purchases, rent and utilities Wages Wage costs are anticipated to account for 34.9% of industry revenue in 2019, marking a slight decline from 37.2% in Provided to: Seattle Pacific University (2134440152) | 03 December 2019 WWW.IBISWORLD.COM Loan Brokers in the US May 2019   21 Competitive Landscape 2014 Since this industry relies on commission and fees, wages are very closely tied to revenue and subject to volatility due to the sales-based nature of industry operations Increased external competition is expected to make the job market more competitive for brokers; as a result, wages are expected to increase at an annualized rate of 9.8% over the five years to 2019 Industry operators rely extensively on skilled labor for all their product and service offerings Purchases Purchases largely include expenditure on materials and supplies that are necessary for operations Overall, since the industry is largely service-based, purchase costs have historically accounted for less than 2.0% of industry revenue In 2019, IBISWorld estimates purchases to account for 1.9% of industry revenue Profit Industry profit, defined as earnings before interest and taxes, is expected to increase over the five years to 2019 IBISWorld expects industry profit to increase from 15.4% of industry revenue in 2014 to 17.7% of industry revenue in 2019 However, this increase is slightly overstated given the low base year; in 2014, profit declined to its lowed level within the past decade Overall, industry profit margins are expected to remain within a tight range over the next five years Depreciation Depreciation does not represent a significant cost for industry operators IBISWorld expects depreciation costs to account for 0.6% of industry revenue in 2019, representing little change from 2014 levels Sector vs Industry Costs Average Costs of all Industries in sector (2019) Industry Costs (2019) 100 17.2 80 Percentage of revenue Cost Structure Benchmarks continued 60 17.7 12.9 1.5 1.4 34.9 13.9 1.5 40 20 n Profit n Wages n Purchases n Depreciation n Marketing n Rent & Utilities n Other 51.6 1.9 1.9 3.1 0.6 39.9 SOURCE: WWW.IBISWORLD.COM Provided to: Seattle Pacific University (2134440152) | 03 December 2019 WWW.IBISWORLD.COM Loan Brokers in the US May 2019   22 Competitive Landscape Marketing Marketing costs are anticipated to account for 3.5% of total industry revenue in 2018 Marketing expenditure for industry operators includes the advertisement of loan-broker services and competitive rates Marketing costs have remained relatively constant during the five-year period Cost Structure Benchmarks continued Other Other costs include general and administrative expenses, data processing costs and licensing Transaction fees are also included in this cost segment Specifically, transaction fees refer to the investment banking advisory and legal fees associated with mergers and acquisitions Given the high level of acquisition activity present among some industry operators, transaction costs can commonly represent a significant cost for industry operators However, transaction costs are typically accounted for as one-time expenses, or dispersed over a short-time period, thus distorting an industry operator’s cost structure Additionally, the other category also includes fees associated with regulatory advisory and consulting services Since this industry is subject to a high degree of regulatory oversight (the recent passage of the Economic Growth, Regulatory Relief and Consumer Protection Act notwithstanding), industry operators commonly enlist the services of regulatory compliance consultants to ensure adherence to current regulations IBISWorld estimates other costs to account for 39.9% of industry revenue in 2019 Internal competition Competition within the Loan Brokers industry is high as brokers are reliant upon connections with the top realtors and lenders in the area they serve Brokers compete on the basis of connections with realtors and lenders, and thereby the multitude of loan options they can offer a client Moreover, broker experience and expertise are highly sought after given the commission- and fee-based revenue structure of industry operations; as a result, talented brokers are paid competitive wages Ultimately, internal competition has increased in line with growing downstream demand for industry services over the past five years External competition External competition for the industry has increased during the five-year period Loan brokers now experience increased external competition from commercial banks, quasi-governmental organizations and online operators Growth in consumer incomes, a thriving housing market and low interest rates have incentivized commercial banks in particular to advertise to consumers directly Banks bypassing operators in the mortgage origination process represent the largest source of external competition to the Loan Brokers industry However, loan brokers are responding to this Rent Rent costs represent a marginal portion of the industry’s overall cost structure, indicating the high ownership of establishments among industry operators In 2019, rent is estimated to account for 1.7% of industry revenue, representing no change from 2014 levels Utilities Utilities not represent a significant cost for the industry In turn, utilities costs are estimated to account for 0.2% of industry revenue in 2019 Basis of Competition Level & Trend  ompetition C in this industry is Highand the trend is I ncreasing Provided to: Seattle Pacific University (2134440152) | 03 December 2019 WWW.IBISWORLD.COM Loan Brokers in the US May 2019   23 Competitive Landscape Basis of Competition continued competition by emphasizing their local expertise and business connections as a competitive advantage Barriers to Entry Historically, the industry’s barriers to entry have been low, primarily because of the relatively small amount of capital required to start operating However, barriers to success have increased during the five-year period primarily due to increased compliance costs under the Dodd-Frank Wall Street Reform and Consumer Protection Act However, certain regulations have recently been eased with the 2018 implementation of the Economic Growth, Regulatory Relief and Consumer Protection Act Additionally, the Loan Brokers industry is highly fragmented; most operators are small in size and not account for a substantial share of the market Capital requirements generally include some form of office space, computers, phones and other general IT infrastructure State licensing requirements represent another barrier to entry for the industry These requirements have been increasing during the five-year period, largely due to the perception that the industry’s lending practices were predatory prior to the subprime crisis Licensing requirements differ on a state-by-state basis, but Level & Trend  arriers to Entry B in this industry are Lowand I ncreasing Industry Globalization Level & Trend  lobalization G in this industry is L owand the trend is S  teady The Loan Brokers industry operates with a low level of industry globalization Operators are primarily domestically owned and offer products and services on a local or regional basis; the industry’s business model is deeply rooted in Barriers to Entry checklist Competition Concentration Life Cycle Stage Capital Intensity Technology Change Regulation and Policy Industry Assistance High Low Mature Low Low Heavy Low SOURCE: WWW.IBISWORLD.COM federal regulation requires licensing exams and criminal background checks to become a mortgage broker in the United States Licensing requirements can also include fees, net worth requirements, surety bond purchases and the existence of a physical office, among other restrictions License fees vary but are generally not excessive; for example, in Oregon, the licensing fee for a broker is $960.00 Work experience requirements also vary on a state-bystate basis, as some states not require previous experience, while others require five or more years of experience in the financial sector relationships with local communities Additionally, exports and imports are not applicable for the industry As these trends are anticipated to continue over the five years to 2024, the industry’s level of globalization is expected to remain low Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   24 WWW.IBISWORLD.COM Major Companies LendingTree Inc | Other Companies Major Players (Market Share) 92.9% Other LendingTree Inc 7.1% Player Performance LendingTree Inc Market Share: 7.1% SOURCE: WWW.IBISWORLD.COM Founded in 1996, LendingTree Inc (LendingTree) is one of the largest online loan brokers in the United States The company is headquartered in Charlotte, NC, and employs 909 individuals LendingTree primarily connects consumers with multiple lenders, banks and credit partners that compete for business by offering competitive rates on the company’s online lending platform LendingTree generated $764.9 million in total revenue as of its latest fiscal year-end in December 2018 (latest data available) The company operates under one reportable segment For consumers seeking home mortgage loans, home equity loans, reverse mortgages and personal loans, LendingTree offers access to a nationwide marketplace of more than 550 partner banks and credit unions The company also offers mortgage products in which it partners with lenders throughout the country to provide full geographic lending coverage, forming a complete suite of loan offerings Due to its wholly online model, LendingTree has rapidly expanded its share of industry-relevant revenue over the past five years Over the five years to 2019, LendingTree has initiated and completed numerous strategic acquisitions The company acquired four online financial service companies in 2018 alone and has already acquired an online personal finance company in the first quarter of fiscal 2019 Overall, the company’s acquisition activity largely explains its robust growth during the five-year period Financial performance Over the five years to 2019, LendingTree’s industry-relevant revenue is expected to increase an annualized 43.8% to total $1.0 billion The company’s explosive growth is largely LendingTree Inc (US industry-specific segment) - financial performance* Year Revenue ($ million) (% change) Operating Income ($ million) (% change) 2014 167.4 N/C -0.5 N/C 2015 254.2 51.9 51.3 N/C 2016 384.4 51.2 31.2 -39.2 2017 617.7 60.7 19.4 -37.8 2018 764.9 23.8 109.3 463.4 2019* 1,030.0 34.7 146.7 34.2 *Estimates SOURCE: ANNUAL REPORT AND IBISWORLD Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   25 WWW.IBISWORLD.COM Major Companies Player Performance continued due to its heightened acquisition activity However, organic growth of its core business remains difficult to determine and thus largely uncertain Moreover, LendingTree has incurred significant transaction costs associated with merger and acquisition activity, ultimately hampering its profit margins and contributing to volatile financial performance Nevertheless, its operating profit is expected to total $146.7 million in 2019 Other Company Performance Founded in 1998 and headquartered in Minneapolis, MN, HomeServices of America is one of the largest real estate brokerages in the United States Although the company operates on a national scale, it does so through 47 unique brand names that cater to local markets In total, the company is estimated to employ 42,500 individuals and maintain 880 brokerage offices The company’s offerings include mortgage brokerage services that are also provided through numerous local subsidiaries and brand names Overall, IBISWorld expects the company’s industry-relevant revenue to total $255.0 million in 2019 HomeServices of America Market Share: 1.8% Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   26 WWW.IBISWORLD.COM Operating Conditions Capital Intensity   |   Technology & Systems   |   Revenue Volatility Regulation & Policy   |   Industry Assistance Capital Intensity Level The level of capital intensity is L ow The Loan Brokers industry operates with a low level of capital intensity IBISWorld estimates that for every dollar spent on wages, the industry will allocate $0.02 to capital investment The industry’s level of capital intensity has increased slightly during the five-year period Industry operators rely on technology to communicate with clients and lenders and to process loan applications As a result, capital expenditures for industry participants include computers, phones and other IT infrastructure However, these costs generally represent small portions of industry revenue; consequently, depreciation is anticipated to account for just 0.6% of industry revenue in 2019 Alternatively, wages are expected to account for 34.9% of total Capital Intensity Capital units per labor unit 0.5 0.4 0.3 0.2 0.1 0.0 Economy Finance and Insurance Loan Brokers Dotted line shows a high level of capital intensity SOURCE: WWW.IBISWORLD.COM industry revenue Industry operators depend extensively on a highly skilled workforce for each product and service Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   27 WWW.IBISWORLD.COM Operating Conditions Capital Intensity continued offering In addition, attracting individuals from this limited pool of skilled labor increases the industry’s average wage Technology and Systems The level of technological change in the Loan Brokers industry is low Industry participants generally rely on modern office technology to send and receive loan and credit information These devices are largely limited to general IT infrastructure Additionally, a typical industry operator uses a multiple listing service that: permits brokers to launch offers; provides an opportunity for brokers to cooperate among each other; and collects and displays crucial information for brokers and customers While the technology used by industry operators has not drastically changed during the five-year period, some advances have accelerated the mortgage lending process for lenders and consumers Software tools are continually being developed to more efficiently evaluate an individual’s loan application External competition from banks and the industry’s increasingly competitive internal environment have forced loan brokers to process loan applications faster As a result, more industry operators are providing product advice and processing loan applications online The Loan Brokers industry has exhibited a high level of revenue volatility over the five years to 2019 Fluctuating levels of consumer confidence and existing home sales have contributed to the industry’s volatility during the five-year period The beginning of the five-year period is characterized by a slowdown in industry activity due to a decline in existing home sales in 2014 However, the Federal Reserve’s decision to raise interest rates in December 2015 marked the beginning of the end of historically low interest rates, hence the surge in home sales in 2015 and 2016 as consumers sought to lock in low mortgage rates IBISWorld estimates existing home sales to have increased 6.3% and 3.8% in 2015 and 2016, respectively, ultimately Level The level of technology change is L ow Revenue Volatility Level The level of volatility is H  igh Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   28 WWW.IBISWORLD.COM Operating Conditions Revenue Volatility continued resulting in a surge in demand for industry services during the corresponding years In more recent years, revenue volatility has declined due to a more robust economy and the increasing normalization of gradually rising interest rates Regulation and Policy Several federal laws and agencies regulate the practices of the Loan Brokers industry In addition, industry operators are subject to the laws of individual states and licensing boards Following the subprime mortgage crisis, an influx of new regulation concerning mortgage loans was introduced to protect consumers and facilitate more responsible lending information about the loan service provider at the time of the loan application Specifically, mortgage brokers and lenders must give the borrower a special information booklet containing consumer information, which includes a mortgage servicing disclosure statement that informs the borrower whether the lender intends to service the loan or transfer it to another lender Additionally, in late 2009, a proposal for the disclosure of the yield spread premium to borrowers came into effect, raising some opposition from mortgage brokers Level & Trend  he level of T Regulation is H  eavy and the trend is Decreasing Real Estate Settlement Procedures Act The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute that was passed in 1974 RESPA aims to help consumers become better shoppers for loan settlement services and eliminate kickbacks and referral fees that unnecessarily increase the cost of certain loan settlement services RESPA covers loans secured with a mortgage placed on a one- to four-family residential property These loans include most home purchases and refinances, among other products The Department of Housing and Urban Development’s Office of RESPA and Interstate Land Sales is responsible for enforcing RESPA RESPA requires that borrowers receive disclosures at various intervals of time, including at the time of loan application, before settlement occurs, at settlement and after settlement They also outline lender servicing and escrow account practices and describe business relationships between settlement service providers Mortgage brokers are primarily affected by RESPA disclosures at the time of the loan application Following reforms to RESPA’s manner of disclosing settlement service costs to consumers, mortgage brokers or lenders must give borrowers information regarding real estate settlement services, an estimate of settlement costs and SAFE Mortgage Licensing Act of 2008 Officially passed on July 30, 2008, the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) was ratified to help clean up the mortgage industry after the subprime crisis It set minimum state licensing standards and established a nationwide mortgage licensing system and registry for the residential mortgage industry The act increased industry accountability by increasing the uniformity and transparency of the regulatory and licensing system Currently, mortgage brokers and mortgage businesses are required to hold state licenses to transact Licensing is done on a state-by-state basis and states vary on a multitude of licensing requirements, including fees However, federal regulation introduced in 2011 requires licensing exams and criminal background checks nationally Home Ownership Equity Protection Act New rules came into effect on October 1, 2009 under an amended Regulation Z (Truth in Lending) of the Home Ownership Equity Protection Act The Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   29 WWW.IBISWORLD.COM Operating Conditions Regulation and Policy continued Industry Assistance Level & Trend  he level of T Industry Assistance is L owand the trend is S  teady rules prohibit unfair, abusive or deceptive home mortgage lending practices, and they apply to all mortgage lenders Additionally, protections have been introduced for “higher-priced mortgage loans.” These protections include prohibiting a lender from making a loan without regard to the borrower’s ability to repay Creditors need to verify the income and assets that will be relied upon to determine a borrower’s repayment ability For all loans secured by a consumer’s principal dwelling, creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home’s value Creditors must provide a good-faith estimate of the loan cost within three days after a mortgage loan application extend Additionally, brokers are no longer permitted to be paid by both the consumer and the lender in mortgage transactions According to the CFPB, the rules officially took effect on January 10, 2014 The Consumer Financial Protection Bureau (CFPB) In January 2013, the Consumer Financial Protection Bureau (CFPB) finalized regulatory changes initiated by the Federal Reserve Board and the Dodd-Frank Wall Street Reform and Consumer Protection Act that influence how industry operators are paid The new rules prohibit broker compensation based on the terms and conditions of a mortgage, which represents an attempt to more closely align the interests of brokers with borrowers and lenders Essentially, mortgage brokers can now only be compensated by lenders with respect to the number of loans they originate and the amount of credit they Economic Growth, Regulatory Relief and Consumer Protection Act Signed into law by President Trump on May 24, 2018, the Economic Growth, Regulatory Relief and Consumer Protection Act (the Regulatory Relief Act) serves to rollback financial regulation imposed under the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Truth in Lending Act (TILA), the SAFE act and several older bills related to consumer lending practices The Regulatory Relief act primarily provides relief to commercial banks, mortgage lenders and regional banking organizations by increasing the significantly important financial institution (SIFI) threshold upon which banks are subject to additional (and costly) regulation Additionally, the Regulatory Relief Act waives and exempts mortgage lenders from certain requirements imposed under previous regulation For example, the Regulatory Relief Act amends the TILA’s required mortgage disclosure waiting period, enabling consumers to take advantage of lower interest rates sooner Overall, the Regulatory Relief Act will serve to promote growth in the industry as consumers, lenders and brokers are met with fewer regulatory obstacles in the home-buying process The Loan Brokers industry does not receive direct industry assistance from government entities However, the industry receives assistance from various industry organizations such as the Mortgage Bankers Association and the National Association of Mortgage Brokers Participation in industry associations lends credibility to industry operators, especially nonemployers Additionally, industry associations serve as a networking channel among other mortgage brokers, lenders, property managers and realtors For example, the National Association of Realtors’ annual Broker Summit brings together loan brokers and realtors to discuss industry trends and strategies Overall, however, the Loan Brokers industry receives a low level of industry assistance Provided to: Seattle Pacific University (2134440152) | 03 December 2019 WWW.IBISWORLD.COM Loan Brokers in the US May 2019   30 Key Statistics Industry Data 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Sector Rank Economy Rank Industry Value Added ($m) 4,684.4 4,015.7 4,851.2 5,507.4 4,243.1 5,764.7 7,030.4 6,932.9 7,140.0 7,190.7 7,385.5 7,662.1 7,924.9 8,155.2 8,328.8 29/31 317/694 Establishments 18,283 15,029 12,981 12,423 11,757 11,617 11,157 11,730 12,659 12,533 12,639 12,864 13,152 13,453 13,786 17/31 279/694 Employment Enterprises (People) 16,978 55,111 13,831 46,075 12,465 37,744 11,849 46,327 11,152 40,943 11,000 45,045 10,456 47,384 10,833 49,712 11,541 49,557 11,410 49,880 11,483 51,221 11,663 52,787 11,906 54,541 12,165 56,055 12,463 57,306 12/31 23/31 267/694 443/694 Exports -N/A N/A Revenue (%) -16.7 43.7 0.2 -12.5 29.9 15.7 8.1 4.0 0.8 2.7 3.9 3.5 2.9 2.1 27/31 471/694 Industry Value Added (%) -14.3 20.8 13.5 -23.0 35.9 22.0 -1.4 3.0 0.7 2.7 3.7 3.4 2.9 2.1 29/31 492/694 Establishments (%) -17.8 -13.6 -4.3 -5.4 -1.2 -4.0 5.1 7.9 -1.0 0.8 1.8 2.2 2.3 2.5 27/31 583/694 Enterprises Employment (%) (%) -18.5 -16.4 -9.9 -18.1 -4.9 22.7 -5.9 -11.6 -1.4 10.0 -4.9 5.2 3.6 4.9 6.5 -0.3 -1.1 0.7 0.6 2.7 1.6 3.1 2.1 3.3 2.2 2.8 2.4 2.2 26/31 26/31 587/694 481/694 Exports (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A IVA/Revenue (%) 61.97 63.73 53.57 60.68 53.44 55.90 58.95 53.77 53.25 53.20 53.20 53.10 53.04 53.03 53.05 8/31 92/694 Imports/ Demand (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Revenue ($m) 7,559.7 6,301.0 9,056.3 9,075.5 7,940.4 10,311.9 11,926.0 12,892.7 13,408.5 13,516.9 13,881.3 14,429.5 14,941.3 15,379.8 15,699.5 30/31 453/694 Annual Change 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Sector Rank Economy Rank Key Ratios 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Sector Rank Economy Rank Exports/ Revenue (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Revenue per Employee ($’000) 137.17 136.76 239.94 195.90 193.94 228.92 251.69 259.35 270.57 270.99 271.01 273.35 273.95 274.37 273.96 28/31 369/694 Wages/Revenue (%) 41.27 45.63 31.67 36.49 37.24 37.50 37.05 36.17 34.97 34.93 34.93 34.69 34.63 34.59 34.63 3/31 110/694 Imports -N/A N/A Wages ($m) 3,119.7 2,875.3 2,867.9 3,311.2 2,956.7 3,867.4 4,418.5 4,663.9 4,689.5 4,721.6 4,848.6 5,005.4 5,174.0 5,319.3 5,436.4 23/31 294/694 Housing Domestic starts Demand (Thousands) N/A 586.9 N/A 608.8 N/A 780.6 N/A 924.9 N/A 1,003.3 N/A 1,111.8 N/A 1,173.8 N/A 1,203.0 N/A 1,242.3 N/A 1,275.6 N/A 1,305.8 N/A 1,341.0 N/A 1,367.4 N/A 1,389.3 N/A 1,407.8 N/A N/A N/A N/A Imports (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Wages (%) -7.8 -0.3 15.5 -10.7 30.8 14.2 5.6 0.5 0.7 2.7 3.2 3.4 2.8 2.2 27/31 484/694 Domestic Demand (%) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Employees per Est 3.01 3.07 2.91 3.73 3.48 3.88 4.25 4.24 3.91 3.98 4.05 4.10 4.15 4.17 4.16 21/31 508/694 Figures are in inflation-adjusted 2019 dollars Rank refers to 2019 data Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Average Wage ($) 56,607.57 62,404.77 75,982.94 71,474.52 72,215.03 85,856.37 93,248.78 93,818.39 94,628.41 94,659.18 94,660.39 94,822.59 94,864.41 94,894.30 94,866.16 18/31 67/694 Housing starts (%) 3.7 28.2 18.5 8.5 10.8 5.6 2.5 3.3 2.7 2.4 2.7 2.0 1.6 1.3 N/A N/A Share of the Economy (%) 0.03 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 29/31 317/694 SOURCE: WWW.IBISWORLD.COM WWW.IBISWORLD.COM Loan Brokers in the US May 2019   Industry Financial Ratios Apr 2014 Mar 2015 Apr 2015 Mar 2016 Apr 2016 Mar 2017 Apr 2017 Mar 2018 Apr 2017 - Mar 2018 by company revenue Small Medium Large ($50m) Liquidity Ratios Current Ratio Quick Ratio Sales / Receivables (Trade Receivables Turnover) Days’ Receivables Cost of Sales / Inventory (Inventory Turnover) Days’ Inventory Cost of Sales / Payables (Payables Turnover) Days’ Payables Sales / Working Capital 1.3 0.7 1.2 1.0 1.3 1.1 1.3 0.4 1.6 0.8 1.2 0.3 1.1 0.2 122.2 59.7 20.7 97.4 278.4 88.5 67.3 3.0 n/a n/a n/a n/a 3.2 6.1 n/a n/a n/a n/a 4.3 17.6 n/a n/a n/a n/a 3.6 3.7 n/a n/a n/a n/a 3.1 1.3 n/a n/a n/a n/a 2.1 4.1 n/a n/a n/a n/a 4.7 5.4 n/a n/a n/a n/a 8.0 3.2 4.4 4.7 3.0 4.0 2.6 2.5 n/a n/a n/a n/a n/a n/a n/a n/a 2.1 38.0 n/a 2.5 36.0 n/a 2.4 33.0 n/a 2.5 35.4 n/a 1.5 44.8 n/a 4.6 22.1 0.1 5.2 20.0 23.6 6.8 49.1 0.5 24.0 7.1 78.0 0.6 31.9 6.8 97.6 0.5 18.8 4.4 62.8 0.6 15.8 4.7 95.5 0.5 21.2 5.1 44.3 0.5 22.6 3.9 58.8 0.7 n/a 15.1 18.6 3.1 2.1 4.0 n/a 13.6 8.0 n/a 1.6 2.0 n/a 18.0 18.1 5.0 2.6 3.3 n/a 16.1 16.2 -0.8 3.3 5.6 n/a 15.2 16.6 -3.0 3.6 6.5 n/a 20.0 19.1 1.8 2.3 7.0 n/a 14.5 14.5 3.5 n/a n/a 29.5 11.8 15.4 20.7 77.3 6.1 2.0 14.7 100.0 3,620.9 28.2 16.5 16.5 16.1 77.3 4.7 3.2 14.8 100.0 4,127.4 21.9 22.0 15.4 13.7 73.0 4.8 4.3 18.0 100.0 3,313.7 24.7 11.9 22.9 18.3 77.6 4.9 2.5 15.0 100.0 3,651.3 29.1 13.7 13.2 17.7 73.6 6.5 2.6 17.3 100.0 566.4 22.2 9.9 30.8 20.8 83.7 3.2 3.3 9.8 100.0 1,531.3 9.3 7.6 51.2 15.3 83.2 1.2 0.3 15.3 100.0 1,553.7 37.9 0.9 2.4 0.4 9.7 51.3 5.5 0.1 3.0 40.0 3,620.9 40.8 0.9 3.1 0.3 9.2 54.3 4.6 0.3 1.6 39.2 4,127.4 39.5 1.2 2.5 0.3 7.3 50.9 7.8 0.3 3.6 37.3 3,313.7 42.2 2.5 1.5 n/a 8.3 54.6 5.6 0.3 1.7 37.9 3,651.3 30.3 1.8 0.9 n/a 9.1 42.2 8.0 0.1 2.3 47.4 566.4 54.5 4.8 2.1 0.1 8.8 70.4 2.7 0.9 0.6 25.4 1,531.3 71.5 0.4 2.9 n/a 3.6 78.3 0.5 n/a 0.8 20.3 1,553.7 113 105 78 104 62 29 13 Coverage Ratios Earnings Before Interest & Taxes (EBIT) / Interest Net Profit + Dep., Depletion, Amort / Current Maturities LT Debt Leverage Ratios Fixed Assets / Net Worth Debt / Net Worth Tangible Net Worth Operating Ratios Profit before Taxes / Net Worth, % Profit before Taxes / Total Assets, % Sales / Net Fixed Assets Sales / Total Assets (Asset Turnover) Cash Flow & Debt Service Ratios (% of sales) Cash from Trading Cash after Operations Net Cash after Operations Cash after Debt Amortization Debt Service P&I Coverage Interest Coverage (Operating Cash) Assets, % Cash & Equivalents Trade Receivables (net) Inventory All Other Current Assets Total Current Assets Fixed Assets (net) Intangibles (net) All Other Non-Current Assets Total Assets Total Assets ($m) Liabilities, % Notes Payable-Short Term Current Maturities L/T/D Trade Payables Income Taxes Payable All Other Current Liabilities Total Current Liabilities Long Term Debt Deferred Taxes All Other Non-Current Liabilities Net Worth Total Liabilities & Net Worth ($m) Maximum Number of Statements Used 31 Source: RMA Annual Statement Studies, rmahq.org RMA data for all industries is derived directly from more than 260,000 statements of member financial institutions’ borrowers and prospects Note: For a full description of the ratios refer to the Key Statistics chapter online Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   32 WWW.IBISWORLD.COM Jargon & Glossary Industry Jargon 2-28 LOANA loan that has a fixed rate for a certain period of years until the rate becomes adjustable for the remainder of the loan NINJA LOANA loan where the borrower can qualify with no income, no job and no assets ALT-A LOANA category of mortgages that have a risk potential greater than prime but less than subprime MORTGAGE ORIGINATIONThe creation of a new mortgage that involves a range of necessary legal papers and placement of the mortgage on the lender’s books IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry CAPITAL INTENSITYCompares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor CONSTANT PRICESThe dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e year published) as the base year This removes the impact of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator DOMESTIC DEMANDSpending on industry goods and services within the United States, regardless of their country of origin It is derived by adding imports to industry revenue, and then subtracting exports EMPLOYMENTThe number of permanent, part-time, temporary and seasonal employees, working proprietors, partners, managers and executives within the industry ENTERPRISEA division that is separately managed and keeps management accounts Each enterprise consists of one or more establishments that are under common ownership or control ESTABLISHMENTThe smallest type of accounting unit within an enterprise, an establishment is a single physical location where business is conducted or where services or industrial operations are performed Multiple establishments under common control make up an enterprise EXPORTSTotal value of industry goods and services sold by US companies to customers abroad IMPORTSTotal value of industry goods and services brought in from foreign countries to be sold in the United States INDUSTRY CONCENTRATIONAn indicator of the dominance of the top four players in an industry Concentration is considered high if the top players account for more than 70% of industry revenue Medium is 40% to 70% of industry revenue Low is less than 40% INDUSTRY REVENUEThe total sales of industry goods and services (exclusive of excise and sales tax); subsidies on production; all other operating income from outside the firm (such as commission income, repair and service income, and rent, leasing and hiring income); and capital work done by rental or lease Receipts from interest royalties, dividends and the sale of fixed tangible assets are excluded INDUSTRY VALUE ADDED (IVA)The market value of goods and services produced by the industry minus the cost of goods and services used in production IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation INTERNATIONAL TRADEThe level of international trade is determined by ratios of exports to revenue and imports to domestic demand For exports/revenue: low is less than 5%, medium is 5% to 20%, and high is more than 20% Imports/domestic demand: low is less than 5%, medium is 5% to 35%, and high is more than 35% LIFE CYCLEAll industries go through periods of growth, maturity and decline IBISWorld determines an industry’s life cycle by considering its growth rate (measured by IVA) compared with GDP; the growth rate of the number of establishments; the amount of change the industry’s products are undergoing; the rate of technological change; and the level of customer acceptance of industry products and services NONEMPLOYING ESTABLISHMENTBusinesses with no paid employment or payroll, also known as nonemployers These are mostly set up by self-employed individuals PROFITIBISWorld uses earnings before interest and tax (EBIT) as an indicator of a company’s profitability It is calculated as revenue minus expenses, excluding interest and tax Provided to: Seattle Pacific University (2134440152) | 03 December 2019 Loan Brokers in the USMay 2019   33 WWW.IBISWORLD.COM Jargon & Glossary IBISWorld Glossary continued VOLATILITYThe level of volatility is determined by averaging the absolute change in revenue in each of the past five years Volatility levels: very high is more than ±20%; high volatility is ±10% to ±20%; moderate volatility is ±3% to ±10%; and low volatility is less than ±3% WAGESThe gross total wages and salaries of all employees in the industry The cost of benefits is also included in this figure Provided to: Seattle Pacific University (2134440152) | 03 December 2019 www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com At IBISWorld we know that industry intelligence is more than assembling facts It is combining data with analysis to answer the questions that successful businesses ask Identify high growth, emerging & shrinking markets Arm yourself with the latest industry intelligence Assess competitive threats from existing & new entrants Benchmark your performance against the competition Make speedy market-ready, profit-maximizing decisions Who is IBISWorld? 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Performance Industry Life Cycle This industry is M  ature The Loan Brokers industry is in the mature stage of its economic life cycle Industry value added (IVA), which measures an industry? ??s contribution... of changes in the purchasing power of the dollar, leaving only the “real” growth or decline in industry metrics The inflation adjustments in IBISWorld’s reports are made using the US Bureau of... to Entry B in this industry are Lowand I ncreasing Industry Globalization Level & Trend  lobalization G in this industry is L owand the trend is S  teady The Loan Brokers industry operates