JPMorgan Chase and Wells Fargo Post Biggest Mortgage Lending Gains in Over a Year

mortgage lendingJPMorgan Chase & Co. (NYSE: JPM) and Wells Fargo & Co. (NYSE: WFM) both posted their largest home loan lending gains in over one year, as the broader U.S. housing market continues its recovery. According to JPMorgan’s financial report for the March quarter of 2015, the institution generated $24.7 billion in mortgage lending, a year-over-year increase of 45 percent. Wells Fargo also made a significant gain, earning $49 billion in mortgages in the March frame, good for an increase of 36 percent over the March 2014 quarter.

Both financial institutions are ranked 1-2 as America’s biggest mortgage lenders, and the main variables pushing this increase in activity clearly include low mortgage rates and a healthier U.S. economy. The two banks reported some of their lowest mortgage origination statistics in almost two decades in 2014. Further, both JPMorgan and Wells Fargo beat forecasts of most number-crunchers, meaning analysts and industry professionals, by a significant margin.

“If you think of the massive footprints these two banks have, the results are an indication of where the mortgage market is heading,” commented vice president Keith Gumbinger in a statement. “The economy is continuing to get stronger and interest rates are still favorable.”

According to Freddie Mac’s data, 30-year fixed-rate mortgages averaged only 3.66 percent in the March 2015 quarter, or the lowest quarterly average since the March quarter of 2013. For 2015, Fannie Mae chief economist Douglas Duncan expects the average rate to fall from 4.2 percent last year to 3.9 percent, on account of continued European economic struggles forcing foreign investors to use U.S. mortgage bonds as a safe haven. Mortgage loan demand was also spurred by a strong jobs market from February 2014 through February 2015.

“Home affordability is very high,” said Wells Fargo Chief Executive John G. Stumpf in an interview with Bloomberg. “Secondly, if you look at wage increases, you are starting to see some of that. Unemployment is down, or job creation, and that’s a good thing for housing. And you are starting to see in certain markets, inventory is available.” Indeed, home sales are expected to rise by about 6.4 percent in 2015 due to the combination of a healthier job market, lower interest rates, and slower price appreciation.