Mortgage M&A deals reach new record despite margin compressions

“2022 was difficult, at best, for residential mortgage companies to prepare for and develop their annual plans,” he said. “It is turning out far differently than most expected.”

While there is plenty of opportunity for both buyers and sellers, Hrobon said that structuring good deals is harder now than it was in previous years, as there is almost no margin of error in M&A deals.

“The expectation of continued margin compression in 2023 and 2024 is driving industry consolidation,” Hrobon added. “Despite this, buyers are active in today’s market and prepared to pay reasonable upfront premiums for well-matched opportunities.

“STRATMOR has been pointing to increased M&A activity for over a year, and that’s exactly what we are seeing in the market now. It is a good idea for lenders to continually evaluate their options, and a well-qualified advisor can lead a lender through the process to ensure that everything important is taken into consideration. It is never too late to take a data-driven assessment of your company’s market position.”