Big banks see mortgage volumes fall as CEOs spar over capital proposals

Big banks JPMorgan Chase and Wells Fargo saw mortgage volumes decrease more than expected in the first quarter of the year despite a regulatory push to make them more active in the space.

JPMorgan Chase’s origination volume hit $13.7 billion in the first quarter, down 14% from the prior quarter and up 46% from the same period last year. Retail channels drove most of the production, accounting for 63.5% of the total. The bank’s home lending revenues reached $1.23 billion in the first quarter, up 2% year over year.

Similarly, Wells Fargo originated $6.3 billion from January to March, down 16% from the prior quarter but up 43% compared to the same period last year. Total home loan revenue declined 9% year over year to $787 million, according to filings with the Securities and Exchange Commission (SEC).

Mortgage volumes fell by an average of about 15% quarter over quarter at the banks. This came in below the Mortgage Bankers Association‘s estimate of a 6% decline, according to Keefe, Bruyette and Woods (KBW) analysts. But margins increased modestly, they said. 

“Net/net, we’d characterize the quarter as largely in line. While the volumes were a bit light, gain-on-sale (margins) was probably slightly higher than expected,” the KBW analysts said. 

In the servicing business, third-party mortgages serviced by Wells Fargo totaled $386.6 billion, down 3% quarter over quarter as the bank continues to reduce exposure to the business. At JPMorgan Chase, they were down 1% in the same period to $656.4 billion.

Overall, Wells Fargo delivered $5.2 billion in net income, compared to $4.8 billion in the same quarter last year. Chairman and CEO Charlie Scharf told analysts that despite volatile markets, the economy remains resilient.

“Upper-income consumers continue to benefit from elevated equity prices, home equity and cash buffers accumulated earlier in the cycle, allowing discretionary spending to remain firm,” Scharf said. “By contrast, lower-income households are more exposed to higher interest rates and energy prices. Financial markets have absorbed these cross-currents with resilience, but we expect continued volatility driven by geopolitical headlines and outcomes as well as the unfolding impact of higher commodities prices.”

Scharf called the new capital proposals for banks a “constructive step.” He noted that if the proposals remain as written, the bank’s risk-weighted assets could decrease by approximately 7% based on its current balance-sheet composition.

In mid-March, federal bank regulators introduced proposals to overhaul capital rules, impacting how depositories treat mortgage assets. The package included revisions to the Basel III framework for large internationally active banks, changes to the Global Systemically Important Bank surcharge and updates to the U.S. standardized approach. Regulators previously abandoned a broader Basel III proposal introduced in 2023.  

Meanwhile, JPMorgan posted $16.5 billion in net income, compared to $14.6 billion in the same period last year. Chairman and CEO Jamie Dimon attributed U.S. economic resilience to tailwinds such as increased fiscal stimulus, deregulation, AI-driven capital investment and the Federal Reserve‘s asset purchases.

He cited geopolitical tensions, wars, energy price volatility, trade uncertainty, large global fiscal deficits and elevated asset prices as primary risks. And in addressing the new regulatory proposals, Dimon said they will force the bank to hold onto $20 billion more capital “for no good reason.”

“Every company in the world has operational risk, and they artificially create risk-weighted assets which do not exist, and this locks up a lot of capital liquidity for eternity for no good reason,” he said.