As mortgage loan application and origination volumes continue to fall, large banks are paying the price of the slowdown.
The overall volume of new mortgages fell 23 percent to $226 billion in the first quarter from $293 billion in the fourth quarter, according to the Mortgage Bankers Association.
Total mortgage origination among the 10 largest banks dropped more significantly, by 27.5 percent from the previous quarter to $88.8 billion, and by 66.7 percent from the first quarter of 2013, according to data compiled by Keefe, Bruyette & Woods, an investment bank focused on the financial services industry.
“Mortgage volumes for the quarter to date were down meaningfully versus the fourth quarter of 2013,” KBW analysts wrote in a report Sunday. “The declines primarily reflect lower refinance volumes. Purchase volumes also came in somewhat lower than expected, likely driven by bad weather that exacerbated the normal seasonal slowdown.”
Of the large banks that provide mortgages and that KBW follows, Citigroup suffered the largest drop in originations compared with the fourth quarter of 2013, with volumes dropping 37.3 percent to $5.2 billion in the first quarter of 2014.
Fifth Third Bancorp had the biggest decrease in mortgage origination compared to a year ago, down 77 percent to $1.7 billion. Citigroup was close behind with a decrease of 71.7 percent from the first quarter of 2013.
The decrease in mortgage loan originations is in turn hurting profits at some of these banks, including JPMorgan Chase, which reported a 19 percent decline in first-quarter earnings. Mortgage origination at JPMorgan Chase fell 27 percent compared to the fourth quarter and 67.7 percent compared to a year ago.
Most banks lost market share in mortgage origination in the first quarter compared to a year ago, except for Bank of America, BB&T Corp. and First Capital Bank, which each gained a percentage point. Market shares of PNC Bank and SunTrust Banks also slightly increased.
Well Fargo maintained its dominant position in the market with a 40.5 percent market share, down from 40.8 percent in the fourth quarter, followed by JPMorgan with a 19.1 percent market share.
Meanwhile, mortgage applications were down to a 14-year low, according to the Mortgage Bankers Association, which could contribute to a slow start to the second quarter.
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