The Fed’s Mortgage Makeover Could Hand Homebuyers a Rare Win

Banks were pushed out of mortgages after 2008 — and now Washington wants them back in. Federal Reserve supervision vice chair Michelle Bowman has proposed easing capital rules, a move that could pull JPMorgan ChaseJPM

, Wells FargoWFC

, and Bank of AmericaBAC

back into the market. The plan would lower the capital held against low-risk mortgages and rework how servicing rights appear on balance sheets — freeing banks to expand lending with less regulatory drag.

• During the pandemic, bank-serviced borrowers were more likely to get payment relief than those with nonbanks like Rocket CompaniesRKT
  , exposing a stability gap regulators want to fix.
• However, in 2023, banks’ share of mortgage originations fell to ~35% from ~60% in 2008, while servicing dropped from ~95% to ~45%, shifting the market toward nonbank lenders.

What’s in it for you: More competition won’t magically slash headline mortgage rates, but it can still improve the final deal through tighter pricing, fewer junk fees, and incentives like lender credits or lower origination charges. Nonbanks could face pressure as traditional lenders tap millions of existing customers to win back share. When large banks with deep balance sheets compete for volume, pricing pressure often spreads across the market — benefiting borrowers regardless of where they get their mortgage.