NEW YORK—It’s mortgages (again) to the rescue of the earnings of numerous major banks, although overall profits are down from one year earlier. JPMorgan Chase & Co., Wells Fargo & Co., and Citigroup Inc. reported they originated $94 billion worth of new mortgages during the second quarter in their core mortgage operations, an increase of $23 billion, or 31%, over the first quarter, according to Reuters.
The new business is being driven by the slow but steady decrease in mortgage rates to levels not seen since 2013. That has led existing borrowers to try and lock in better rates, while new borrowers have been enticed by low borrowing costs and low down-payment offers, Reuters reported.
With mortgage rates near historic lows, and volumes still strong in the early days of the third quarter, banks predict the trend will continue, providing a bright spot in a low-rate environment hammering their wider results, Reuters added.
JPMorgan reported it has added more than 1,000 employees this year to handle the swell in mortgage business. The bank’s mortgage chief believes U.S. lenders will make about $1.8 trillion of mortgage loans this year, 40% more than he had expected at the start of the year.
Second quarter profits at Wells, JPMorgan and Citigroup were down 3.5%, 1% and 14% from a year earlier, respectively, Reuters reported.