Bowman Concerned About Community Banks’ Exit from Mortgage Markets

Speaking to attendees at a mortgage industry event in Kansas City, Missouri, today, Federal Reserve Governor Michelle Bowman expressed optimism about the trajectory of the housing market but raised concerns about the declining number of community banks remaining in the consumer real estate mortgage market.

“As regulatory burdens have risen, many community banks have significantly scaled back their lending or exited the mortgage market altogether,” Bowman said. “Home mortgage lending has traditionally been a significant business for smaller banks, and the decline in this business threatens a part of the banking industry that plays a crucial role in communities.”

Bowman noted that while the housing market rebounded slowly after the financial crisis, the current robust job market “translates into higher incomes, greater confidence, and more people looking to buy a new home or considering whether to make a change from their current home.” She added that “the national indicators suggest a positive growth outlook for the housing sector over the next several quarters.”