With Basel III changes on the horizon, could banks pull market share from IMBs?
One of the biggest stories in the mortgage industry in 2026 could be changes to allow banks to play a larger role in the mortgage market.
The proposed Basel III changes, which are currently in a public comment period until June 18 before they are finalized, could encourage banks to get more heavily back into mortgage lending.
An increase in banks, especially in the wholesale lending space, could provide more liquidity to the market and therefore improve pricing. However, experts caution that bringing banks back into mortgage lending to a larger degree needs to be done carefully to avoid unnecessary risk.
If banks do dive back into mortgage lending on a larger scale, what does that mean for independent mortgage banks (IMBs), non-banks, and others who are outside of the retail space? And what does that mean for mortgage brokers who work with those non-banks? One expert said that customer satisfaction is one area where banks are winning against IMBs and non-banks.
Bruce Gehrke (pictured top), senior director of wealth and lending intelligence at JD Power, said preliminary data from 2026 shows that banks are being viewed more positively in both servicing and origination than IMBs and non-banks.
“We’ve seen a significant uptick in this side of the data,” Gehrke told Mortgage Professional America. “The experience on both origination and servicing from bank customers is being reported significantly higher than non-bank performers. So far in the 2026 studies, I think servicing is really different.
“It’s running 68 points higher on average for the bank servicers versus the IMB servicers. And that’s a significant gap. Origination early on is 30 points different. And it’s up quite a bit year over year for those banks.”
Doubling down on customer base
One advantage that Gehrke thinks banks are leaning into is the fact that their customers aren’t just getting a mortgage from them. This allows the banks to build deeper relationships with customers, and also incentivizes them to keep those customers happy to avoid losing their business completely.
“I think what can happen here is they’re really doubling down on that customer base,” he said. “Especially the big banks like Chase, Wells Fargo, and Bank of America, they’re really focused on lending to their broader client base. They’re really, really focused on keeping those customers within their universe of product portfolios. They really doubled their marketing down, and they’re really executing very well with that group.”
Gehrke isn’t convinced that even with changes to Basel III, banks are going to dive heavily back into the mortgage space once again. But he does think that IMBs should be keeping an eye on the widening satisfaction numbers.
“I think you're more likely to see that move forward and maybe that gap will grow a little bit, but right now it’s fairly significant,” he said. “It’s a little too early to say that’s a definite trend, but it is something we’ve seen. The bank average servicing has been up for every wave, every quarter over the last year and a half, and you’re seeing the origination experience up over last year, where the IMB experience is falling back a little bit.”
It’s not just the big banks that are winning out. Gehrke said similar satisfaction results are being seen at mid-sized banks like PNC Bank and Truist.
“You see it even down into the mid-sized banks like the PNCs and the Truist of the world,” he said. “It’s definitely something that is resonating in the data that we see so far.”
Out-competing banks
Gehrke doesn’t believe IMBs look at banks as true competitors in the mortgage industry. He said, while that’s likely true for someone who isn’t looking to their bank for a loan product, for customers of banks who have a built-in loyalty, that might be a different story.
“I don’t think that a lot of these independent mortgage banks really look at the big banks as true competitors,” he said. “But I think that can be shortsighted in that they’re not going to come out and necessarily compete head-to-head over an unaffiliated prospect. But if it’s a Chase customer, that’s a different story.”
Two other areas where IMBs are competing with banks are websites and mobile applications.
“I think a lot of the IMBs think that they can outcompete the banks one-on-one,” Gehrke said. “I think to some degree they probably can. They’re very focused, and they’re specialists in what they’re doing. But the banks have gotten very good, and that’s the thing that I think is concerning, that they need to keep one eye on.
“We launched a digital study for mortgage servicers last year, which really just focuses on websites and mobile apps. Banks dominate those. They have a head start basically because they have a customer base that’s familiar with their platforms. They’re consistently familiar with it, and the usability is better. Banks also have a lot more capital to invest because it’s a bigger part of their business strategy.”
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