Mortgage

Did the mortgage business have a good second quarter? Big bank originations may tell the tale

Wells Fargo, JPMorgan Chase, Citigroup all did big mortgage business in Q2

Thanks in large part to interest rates that have fallen throughout much of the year, it appears that the mortgage business had quite a solid second quarter, at least at some of the nation’s largest lenders.

On Tuesday, Quicken Loans revealed that the second quarter of 2019 was its best quarter ever, but that’s not the only lender that saw originations rise.

Mortgage originations were also up at Wells Fargo, JPMorgan Chase, and Citigroup, each of which released their second quarter financial results this week.

Across all three big banks, mortgage originations were up from the first quarter, although that’s to be expected given the seasonality of the housing market (more people tend to buy homes in the spring and summer months).

But more important because it offers a true apples-to-apples comparison, mortgage originations were up at each of those banks year-over-year.

At Wells Fargo, for example, its second quarter originations rose from $50 billion last year to $53 billion this year. For comparison, Wells Fargo originated $33 billion in mortgages in the first quarter.

And a more concrete sign that originations are trending up, Wells Fargo received $90 billion in mortgage applications in the second quarter, up from $64 billion in the first quarter, and up from $67 billion in the second quarter of last year.

Also, Wells Fargo’s application pipeline (applications that are in process) is at $44 billion as of the second quarter, up from $32 billion in the first quarter and $26 billion in the second quarter of last year.

Originations were up at Chase too. Chase reported Tuesday that it originated $24.5 billion in mortgages in the second quarter, up from $15 billion in the first quarter, and up from $21.5 billion in the second quarter of last year.

Chase also provides a breakdown of originations by lending channel, and the split among retail and correspondent was nearly even. According to the bank, $12.5 billion of its originations came from retail, while $12 billion came from correspondent.

Citi also saw a rise in originations, continuing a recent trend at the bank, which scaled back its lending operations a few years ago, but recently began to ramp those back up.

And the proof is the pudding, as Citi saw originations rise by 50% year-over-year in the second quarter.

According to Citi, the bank originated $3.9 billion in mortgages in the second quarter, up from $2.6 billion in the second quarter of last year. In the first quarter of this year, Citi originated $2 billion in mortgages.

Overall, each of the big banks also saw their overall net income rise in the second quarter. Citi’s income rose from $4.5 billion last year to $4.8 billion this year. Wells Fargo’s net income was $6.2 billion in the second quarter, compared with $5.2 billion in second quarter of 2018. JPMorgan Chase’s net income was a record $9.7 billion, up 16% from last year.

So, is the good fortune at the big banks (and Quicken Loans) a sign that the mortgage business had a big second quarter? Or does it mean that the big fish are swallowing up all of the business? Stay tuned.

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