5 Biggest Banks Admit Mortgage Originations Fell by 21.1% in the Third Quarter

It's no exaggeration to say that the mortgage market is buckling under the pressure of higher interest rates. But while this has been common knowledge for some time now, we didn't know how bad the carnage would be -- that is, until the last few days.

On Friday, the nation's two largest mortgage originators, Wells Fargo (NYSE: WFC  ) and JPMorgan Chase (NYSE: JPM  ) , announced third-quarter earnings. And on Tuesday and Wednesday of this week, Citigroup (NYSE: C  ) , Bank of America (NYSE: BAC  ) , and U.S. Bancorp (NYSE: USB  ) followed suit. Each bank, in turn, provided its mortgage origination volumes.

Bank

Third-Quarter Mortgage Volume (billions)

Quarterly Change (from 2Q13)

Wells Fargo

$80.0

(28.6%)

JPMorgan Chase

$40.5

(17.3%)

Bank of America

$24.4

(9%)

U.S. Bancorp

$22.5

(11.8%)

Citigroup

$14.5

(15.7%)

Total

$181.9

(21.1%)

Source: Company filings.

As you can see, Wells Fargo led the way in terms of both volume and sequential decline, announcing a 28.6% drop compared to the second quarter. JPMorgan was second in both regards followed by Citigroup, U.S. Bancorp, and Bank of America. Altogether, these five lenders, which account for roughly a third of the overall mortgage market, saw home loan volumes, and particularly refinancings, fall by 21.1%.

It's hard to deny that this is bad news. At the same time, it's worth noting that the combined results were better than expected. At an industry conference last month, JPMorgan's chief financial officer, Marianne Lake, said that it and "Fannie, Freddie and the [Mortgage Bankers Association] agree that the volume reduction will be 35% flat."

The point being, while 21.1% is nothing to shake a stick at, things could have been a lot worse.

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