How Have Mortgage Origination Volumes For The Largest U.S. Banks Changed In The Last Five Quarters?

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Mortgage originations for the country’s five largest commercial banks have recovered from the lows seen in 2014, but the growth in origination volumes for these banks has been lower than the growth seen in the overall industry. In fact, the market share of these five banks has fallen sequentially for 5 consecutive years now – from a high of over 50% in 2011 to 27% in 2016.

CB_QA_MortgageOrigChange_FY16

*Total U.S. Originations includes fresh mortgages as well as mortgage refinances as compiled by the Mortgage Bankers Association [1]

The mortgage industry has been extremely volatile since early 2005 – with a boom over 2005-2007 being followed by the crash that contributed to the economic downturn. As the economy recovered from the recession, record-low interest rates and government-led incentives gave a boost to the industry in 2011-2012, when homeowners rushed to get their mortgages refinanced to benefit from the improved interest environment and lending terms. Refinancing activity dried up soon, though, and without much improvement in the demand for fresh mortgages, Q1 2014 saw the lowest mortgage origination volumes since Q3 1997. Data compiled by the Mortgage Bankers Association (MBA) shows that U.S. mortgage origination volumes jumped from a low of $246 billion in Q1 2011 to $597 billion in Q4 2012 before dropping to $247 billion in Q1 2014. Continued low mortgage interest rates, coupled with a strong economic outlook, helped industry originations recover to $561 billion in Q3 2016 before falling to $470 billion in Q4 2016 in response to the Fed’s rate hike in December. But clearly, banks have seen their share of the pie shrink over recent years. This is largely because of homeowners shifting to non-bank mortgage lenders due to reasons ranging from better interest rates to more personalized service offerings. [2]

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U.S. Bancorp’s growth in the mortgage industry remains impressive, though, as the regional banking giant remains well ahead of the much larger Citigroup. Having outperformed Bank of America too in 2012, U.S. Bancorp has held on to the#4 position in terms of mortgage origination for every single quarter since early 2013. You can see how changes to U.S. Bancorp’s mortgage origination volumes affect our price estimate for the bank by making changes to the chart below.

See the links below for more information about the 5 largest U.S. commercial banks:

See full Trefis analysis for U.S. Bancorp | Wells Fargo | JPMorganBank of America | Citigroup

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Notes:
  1. MBA Quarterly Origination Estimates, MBA.org []
  2. Guess who’s issuing slews of mortgages? Not your bank, CNBC, Apr 1 2015 []