Big banks crush Q2 mortgage origination expectations

Big banks exceeded analysts’ expectations for mortgage origination volume in the second quarter of 2026, posting an average increase of 32% compared to the prior three-month period. The strong performance from depository institutions brings a glimmer of hope for nonbank lenders that are set to report Q2 earnings in the coming weeks.

“The banks’ second-quarter volumes were well above our expectations of a 3% increase in the second quarter and industry forecasts of a 6% increase,” BTIG analysts noted in a report issued Tuesday. “The 30% increase also exceeds the 11% increase in industry mortgage-backed securities (MBS) issuance for the quarter.”

Analysts at Keefe, Bruyette & Woods (KBW) added that while the quarter was undeniably positive for volume, “it remains unclear if this reflects industry volume or if banks are taking share from nonbanks.”

JPMorgan Chase originated $17.2 billion in mortgage from April through June, up 26% quarter over quarter. The bulk of that volume came from its retail channel ($10.6 billion, up 22%), followed by correspondent business ($6.6 billion, up 32%).

Competitor Wells Fargo delivered $9 billion in mortgage production during the second quarter, a 43% spike from the first quarter, driven entirely by its retail branch network. Meanwhile, Bank of America originated $8.2 billion in mortgages (up 28.4% from Q1) and $2.9 billion in home equity loans (up 17.7%).

“The combination of first- and second-lien mortgage balances remains relatively stable reflecting elevated rates, and included the ninth consecutive quarter of average home equity growth,” Alastair Borthwick, Bank of America’s chief financial officer, told analysts.

While Bank of America and Wells Fargo do not disclose gain-on-sale (GOS) margins, margins at JPMorgan declined 44 basis points to 85 bps, driving a 17% quarter-over-quarter drop in production revenue.

“We think this was worse than expected given the seasonally strong quarter, despite higher average mortgage rates. However, GOS margins could have been impacted by pipeline hedge losses or other one-time items,” KBW analysts wrote. “We are modeling fairly flat gain-on-sale margins by channel for the nonbank mortgage originators.”

Servicing strategies

In the servicing sector, third-party mortgages serviced by Wells Fargo totaled $361.4 billion, down 7% quarter over quarter as the bank continues its strategic retreat from the space. At JPMorgan Chase, the servicing portfolio dipped just 1% in the same period to $652.8 billion.

“Home lending revenue declined 7% from a year ago, reflecting lower loan balances. However, the rate of reduction has continued to slow with balances relatively stable from the first quarter,” Michael Santomassimo, Wells Fargo’s CFO, told analysts. “Lower revenue also reflected the continued reduction in the size of our servicing business, with third-party mortgage loans serviced for others down 21% from a year ago.”

Overall, Wells Fargo delivered $6.4 billion in net income in Q2, up from $5.4 billion in the same quarter last year. In a statement, chairman and CEO Charlie Scharf mentioned ongoing concerns about affordability and inflation, but said that labor market and wage growth remain robust.

“We know that such favorable conditions do not go on forever, so we are being selective about how much and where to grow,” Scharf said.

JPMorgan posted $21.1 billion in net income ($16.9 billion excluding gains from Visa shares and certain equity investments), compared to $16.4 billion in Q2 2023.

Jamie Dimon, the bank’s chairman and CEO, said in a statement that the U.S. economy continues to be resilient, supported by AI-driven capital investment, fiscal stimulus and more efficient regulation.

“However, several risks are shifting below the surface like tectonic plates, including geopolitical tensions and wars, sticky inflation, large global fiscal deficits, and elevated asset prices,” Dimon said.

Bank of America’s net income came in at $9.1 billion for the quarter, up from $7.2 billion a year ago.