NEW YORK–Big banks continue to push into big mortgages.
Lending for jumbo mortgages, those that exceed $417,000 in most U.S. markets, surged at J.P. Morgan Chase & Co. and Bank of America Corp. in 2015, according to new data.
CNBC reported the banks originated $37.1 billion and $23.3 billion, respectively, of jumbos—up 88% and 68% from 2014. U.S. Bancorp’s jumbo lending increased around 50% to $8.3 billion.
The figures are based on Inside Mortgage Finance’s analysis of recently released mortgage data by banks and other lenders under the Home Mortgage Disclosure Act, according to CNBC.
“Banks have been increasingly targeting the jumbo loan market since the housing bust. Jumbo borrowers tend to be among the lowest-risk mortgage customers because they have higher credit scores on average and make larger down payments,” CNBC said. “The loans also have a lower delinquency and foreclosure rate than smaller loans, according to mortgage data firm Black Knight Financial Services.
At some large banks, jumbos now account for a much larger share of mortgages. At Citigroup Inc., for instance, jumbos accounted for 52% of total mortgage dollars originated in 2015, up from 42% a year prior, according to Inside Mortgage Finance. The bank says its total jumbo originations rose 53% in 2015 from the prior year to $19.1 billion.
Regional banks are also ramping up jumbo lending.
CNBC reported that most banks are holding the high-margin jumbos on their books, perceiving them as having lower risk than the smaller loans they sell to Freddie Mac or Fannie Mae.