While the tallying up isn’t quite done yet, all indications are that 2019 will end up being a very good year for the mortgage business.
Thanks to mortgage rates that were consistently a full percentage point below 2018’s rates for much of the year, last year saw a significant rise in mortgage originations.
That was clearly seen at Wells Fargo, JPMorgan Chase, Bank of America, and Citigroup, which all saw their respective mortgage originations rise in each quarter of 2019.
Originations first began to pick up at each of those big banks in the second quarter, which isn’t that unusual as spring homebuying season typically leads to an increase in the mortgage originations in the second quarter.
Originations continued rising in the third quarter as low interest rates drove increases at each bank.
But bucking the traditional seasonal slowdown that occurs towards the end of the year, each bank saw originations continue to increase in the fourth quarter as well.
Each of those banks reported their fourth quarter earnings in the last two days, and examinations of each bank’s earnings materials show that originations were up at each bank due to low mortgage rates.
Wells Fargo originated $60 billion in mortgages in the fourth quarter, up slightly from the bank’s third quarter total of $58 billion.
But that figure was but up significantly from the year before. In the fourth quarter of 2018, Wells Fargo originated $38 billion in mortgages.
Wells Fargo also received $72 billion in mortgage applications during the fourth quarter, although that figure is down from the bank’s totals in the second and third quarter. During the second quarter, Wells Fargo received $90 billion in mortgage applications. That figure dropped slightly to $85 billion in the third quarter.
And while the fourth quarter saw the lowest dollar figure of mortgage applications since the first quarter, the fourth quarter saw Wells Fargo originate its highest volume of mortgages of any quarter in 2019.
Beyond that, Wells Fargo also disclosed that a full 50% of its mortgage originations in the fourth quarter were for refinances. That’s the highest that share was in any quarter in 2019.
For comparison, in the fourth quarter of 2018, 78% of Wells Fargo’s mortgages were purchase mortgages. But in the fourth quarter of 2019, it was an even 50-50 split.
Chase also saw its highest origination volume of the year in the fourth quarter. According to that bank’s earnings materials, Chase originated $33.3 billion in mortgages in the fourth quarter.
That’s up from $32.4 billion in the third quarter, $24.5 billion in the second quarter, $15 billion in the first quarter, and $17.2 billion in the fourth quarter of 2018.
The bank saw originations increase from its retail segment in each quarter of 2019, climbing from $7.9 billion in the first quarter to $16.4 billion in the fourth quarter.
Meanwhile, the bank’s correspondent lending channel actually dropped in the fourth quarter, falling from $18.2 billion in the third quarter to $16.9 billion in the fourth quarter.
Despite that drop, the bank’s correspondent lending channel doubled its production from the previous year’s fourth quarter, when the bank originated $8.2 billion in correspondent lending.
Bank of America
Bank of America, meanwhile, also turned in its best quarter of the year in the last quarter of 2019.
Overall, Bank of America originated $22.11 billion in mortgages in the fourth quarter. Of that, $14.65 billion came from the bank’s consumer banking segment, while the remaining amount came from the bank’s Global Wealth and Investment Management segment, which includes Merrill Lynch.
As stated above, the bank’s lending total in the fourth quarter was its highest of the year. In the third quarter, Bank of America originated $20.66 billion in mortgages. In the second quarter, that figure was $18.23 billion. And in the first quarter, the bank originated $11.46 billion.
In the fourth quarter of 2018, the bank originated $9.42 billion, meaning the bank more than doubled its fourth quarter originations from 2018 to 2019.
Citi also more than doubled its fourth quarter originations. In the fourth quarter of 2018, Citi originated just $2.3 billion in mortgages. Compare that to the fourth quarter of 2019, when the bank originated $6 billion in mortgages.
As with the other banks, Citi increased its originations in each quarter of 2019. In the first quarter, the bank originated $2 billion in mortgages. That figure increased to $3.9 billion in the second quarter. And in the third quarter, that figure rose to $5 billion.
That continues a recent trend at the bank, which scaled back its lending operations a few years ago, but began to ramp those back up in 2018.
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