Dominance of the mortgage market by a few big banks is undermining monetary policy, said a senior policy maker at the US Federal Reserve, in comments that may herald greater scrutiny of lenders such as Wells Fargo and JPMorgan Chase.Bill Dudley, president of the New York Fed, said “concentration of mortgage origination volumes at a few key financial institutions” meant that banks were not passing on low interest rates to borrowers.
The comments highlight a new problem in US finance: a lack of competition after the financial crisis and tougher regulation leading many banks to pull back from arranging mortgages.