WASHINGTON — The amount of mortgages held by national banks has diminished by nearly half since the financial crisis, to $3.26 trillion in the third quarter, according to a report by the Office of the Comptroller of the Currency.
The OCC’s quarterly metrics report, released Tuesday, showed continued improvements in credit quality of mortgage loans at banks. But it also noted that the report is based on $3.26 trillion in principal balances, representing 32% of all mortgages in the U.S. Ten years ago, that figure was $6.1 trillion in mortgage balances, representing 60% of all outstanding mortgages.
The staggering decline of mortgages at traditional banks shows just how much the mortgage market has moved to nonbanks. Regulators have previously taken note of this shift amid concerns that banks could take greater risks to stay competitive.
“The highly competitive environment with nonbanks, particularly in the residential mortgage market, results in banks seeking to improve operating efficiency and considering introducing new consumer products,” the OCC said in its semiannual risk report released earlier this month.
Overall, however, national banks continue to underwrite healthy mortgages. The OCC’s third-quarter mortgage metrics report showed that 95.4% of mortgages at banks were current and performing, up from 94.8% a year earlier.
New foreclosures fell 3.7% to 28,508 in the third quarter from the previous quarter and fell 16.8% from a year earlier. Mortgage modifications also declined quarter over quarter, by 21.3% to 25,701. About 69.2% of those mortgage modifications were to reduce the loan’s monthly payments.