Largest US Banks Lost Mortgage Market Share



Sharp decline in mortgage originations

In 2Q17, the five largest US banks originated residential mortgages worth $112.0 billion, which was higher than the first quarter’s figure of $96.0 billion but was well below $129.0 billion reported in 2Q16. The market share of these banks fell from 30.0% in 4Q16 to 24.0% in 2Q17, indicating a sizable reduction in fresh mortgage applications.

A series of interest rate hikes by the Fed caused mortgage originations to fall from $561.0 billion in 3Q16 to $361.0 billion in 1Q17. However, a sharp increase in fresh mortgages led to an improvement in the figure to $463.0 billion in 2Q17.

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The Fed finalizes rules to help unwind big banks

The Fed has finalized a new rule that would make it easier to wind down systemically important US banks (XLF). The rule requires these banks (BAC) to amend the common financial contracts so they can’t be immediately canceled if the firm enters bankruptcy. The new rules would apply to eight major banks, including JPMorgan Chase (JPM), Goldman Sachs (GS), and Citigroup (C).


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