Bank of America mortgage origination volume declines 7% in Q3

In the third quarter of 2024, Bank of America (BofA) saw a decline in mortgage production, despite a drop in interest rates that benefited competitors like Wells Fargo, JPMorgan Chase and Citi. 

BofA announced on Tuesday that it posted $5.3 billion in first-lien mortgage volume from July to September, a 7% decline from the $5.7 billion recorded in the previous quarter and a 4% decrease compared to its $5.5 billion total in Q3 2023. In second-quarter 2024, the bank’s mortgage origination volume jumped 66%.

Chief financial officer Alastair Borthwick explained that consumer banking loan growth was largely driven by credit cards, small-business loans and auto loans. But this overall growth was muted by a decline in mortgage balances as paydowns exceeded originations in a higher rate environment.

Citi, which also announced its earnings on Tuesday, reported a more positive performance with $3.9 billion in originations, up 7% from the prior quarter and up 18% year over year. 

Last week, JPMorgan maintained its top position among depository mortgage producers with $11.4 billion in Q3 volume, followed by Wells Fargo at $5.5 billion. Combined, the four largest depository mortgage lenders produced roughly $26 billion in mortgages from July through September.

Nonbank mortgage lenders such as Rocket Mortgage, United Wholesale Mortgage, loanDepot, Pennymac, Newrez and Mr. Cooper, among others, are expected to release their quarterly earnings in the coming weeks. 

Home equity

BofA’s home equity loan production also dropped. In Q3 2024, the bank originated $2.28 billion in home equity loans, a 4.3% decline from the $2.39 billion reported in Q2 and a 5.4% decrease from $2.42 billion in Q3 2023.

The bank’s total outstanding residential mortgages stood at $227.8 billion as of Sept. 30, compared to $227.5 billion in Q2 and $229 billion in Q3 2023. Its home equity portfolio was valued at $25.48 billion at the end of the third quarter, compared to $25.44 billion in Q2 2024 and $25.49 billion in the same period last year. 

Bank of America’s total mortgage-backed securities had a fair market value of $70.3 billion as of Sept. 30, up from $57.1 billion on June 30.

Despite the declines in its first mortgage and home equity sectors, BofA reported a steady net income of $6.9 billion in Q3 2024, mirroring last year’s figures. The consumer banking division contributed $2.7 billion to this total. Credit loss provisions remained at $1.5 billion, according to filings with the Securities and Exchange Commission (SEC). 

BofA chairman and CEO Brian Moynihan said in a statement that the bank’s team produced another “solid earnings result.” 

Company executives told analysts that despite planned revisions to the proposed Basel III Endgame capital rules, which were announced by Federal Reserve officials, the company’s capital strategy has not changed.