Banks gained market share in mortgage lending in the first quarter.


According to a report by Keefe, Bruyette & Woods, the quarterly increase in mortgage loan mix at eight banks has exceeded expectations for the entire industry, suggesting that this segment is regaining market share.

Eight banks followed by KBW (Wells Fargo, JP Morgan Chase, US Bancorp, Bank of America, Troist Bank, First Republic Bank, Citigroup and PNC Financial Services Group. This is a mortgage loan. Compared to quarterly decline recently forecast 13% by the Bank of America and the Wells Fargo Banking Association. Freddie mac..The result wins Quote from Fannie Mae It fell 6% in the first quarter.

According to KBW analyst Bose George, this means that some banks, such as JPMorgan Chase, are likely to have regained market share and could lead the industry during this time. I go.

However, “the volume was not sufficient to compensate for lower profit margin due to lower production revenues. Most banks“The decline in earnings on sales has reduced margins to normal levels compared to the oversized earnings seen last year,” George wrote in a report.

The sales profit margin declined quarterly in 7 of the 8 banks. The outlier was Wells Fargo, where the increase was due to the bank’s early redemption of loans from Genie May’s mortgage-backed securities pool.

Financial results were primarily defined by the origination channels highlighted by each bank, according to a report by Piper Sandler.

“Banks with a high percentage of origin in retail channels, or banks that focus on retail channels (Wells Fargo, PNC), tend to have stronger results,” but banks with more respondents (Truist, »US Bank, Citizens) are putting a lot of pressure on mortgage banking results in the previous quarter. ”Said Kevin Barker and R. Scott Schieffers, Managing Directors of Piper Sandler.

At the same time, mortgage management rights valuations have increased quarterly, at a rate higher than KBW’s forecast of 20% (27% for the five banks that provided this information).

Valuation of management rights with a 10-year increase in Treasury yields of 82 basis points Corresponding increase of 50bp At 30-year end-2020 mortgage rates.

“Additionally, the price of MSR is likely to improve as market risk (like tolerance) decreases,” George said. “We believe the strength of MSR is a positive watch for owners of service assets such as Cooper, New Residential, Two Harbors, Penny Mac Financial Services and Penny Mac Mortgage Investment Trust.”

Piper Sandler said Cooper has one of the largest unhedged MSR portfolios compared to other publicly traded non-banks, and the first quarter could see Cooper up to $ 125 million. MSR Ranking According to Piper Sandler’s prediction.

Wells Fargo, with the largest MSR portfolio in the industry, grew from $ 857 billion at the end of the fourth quarter to an additional $ 801 billion on March 31.

This decrease is the result of Wells Fargo reducing the amount of loans it purchases on its corresponding channels.

“In a year or two, some non-banks such as Rocket, Pennymac Financial Services, New Residential and Cooper could gain a greater share of the services market than Wells Fargo,” said Piper Sandler. It was. “It should be noted that Wells Fargo is starting to reform the corresponding non-conforming loans, and over time more volumes may be visible.”

Banks gained market share in mortgage lending in the first quarter.


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