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Why mortgage lending at Wells Fargo, Chase and Citi plunged
https://www.marketwatch.com/story/why-mortgage-lending-at-wells-fargo-chase-and-citi-plunged-2019-01-15What’s going on? Here’s how JPMorgan CFO Marianne Lake described it in her prepared remarks to analysts Wednesday: “Home Lending revenue was down 8%, driven by lower net reduction revenue in a low volume highly competitive environment.”
In other words, fewer people want to take out mortgages from us, and those who do aren’t as profitable for us.
...
Among those people who do find houses to buy or a reason to take out a different mortgage, more are using “non-banks” like Quicken Loans and LoanDepot than old-fashioned deposit-taking institutions. As of the end of last year, 59% of all mortgages were made by non-banks, according to Urban Institute data.
That’s the “highly competitive environment” Lake was describing. But the strain is hitting all types of lenders; on the same day that JPMorgan announced earnings, mortgage lender Mr. COOP, +1.40% announced it was cutting 109 employees.
And it’s not going to be over any time soon. Projections for new mortgage loans, or originations, are at best flat in 2019. That also comes from the Urban Institute, which surveys three institutions for their origination forecasts. Among the three, only Freddie Mac FMCC, +6.29% expects originations to increase in 2019, and when estimates of declines from Fannie Mae FNMA, +6.25% and the Mortgage Bankers Association are factored in, the outlook is bleak.
In other words, fewer people want to take out mortgages from us, and those who do aren’t as profitable for us.
...
Among those people who do find houses to buy or a reason to take out a different mortgage, more are using “non-banks” like Quicken Loans and LoanDepot than old-fashioned deposit-taking institutions. As of the end of last year, 59% of all mortgages were made by non-banks, according to Urban Institute data.
That’s the “highly competitive environment” Lake was describing. But the strain is hitting all types of lenders; on the same day that JPMorgan announced earnings, mortgage lender Mr. COOP, +1.40% announced it was cutting 109 employees.
And it’s not going to be over any time soon. Projections for new mortgage loans, or originations, are at best flat in 2019. That also comes from the Urban Institute, which surveys three institutions for their origination forecasts. Among the three, only Freddie Mac FMCC, +6.29% expects originations to increase in 2019, and when estimates of declines from Fannie Mae FNMA, +6.25% and the Mortgage Bankers Association are factored in, the outlook is bleak.
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