Mortgage originations climb for second consecutive quarter in Q3

One- to four-family mortgage originations rose in the third quarter for the second consecutive time after a multi-quarter decline.

Combined retail and wholesale originations for these mortgages totaled $84.50 billion in the third quarter, up from $83.37 billion in the second quarter and $58.53 billion in the first quarter, an analysis by S&P Global Market Intelligence showed. These mortgages held by US banks totaled $2.818 trillion as of Sept. 30, up from $2.753 trillion in the second quarter.

Delinquencies decline

Delinquencies dropped to 1.82% as of the third quarter, down from 1.97% as of the third quarter of 2022.

Year-over-year home price increases continued to shrink, with the average Federal Housing Finance Agency House Price Index rising by 5.5% in the third quarter, compared to a 3.2% gain in the second quarter and a 12.1% gain in the third quarter a year earlier.

Non-interest income proportion drops

Despite the increase in the total dollar amount of loans sold, non-interest income on one- to four-family residential loans as a percentage of total non-interest income fell in the third quarter to 1.37%, or about $1.02 billion. In the second quarter, it was 2.55%, or about $2.00 billion.

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Western Alliance leads originations

Of the top 20 US banks by total originations of one- to four-family mortgages, Western Alliance Bancorp. originated the largest amount of these mortgages in the third quarter, $12.19 billion, which was a 4.8% increase year over year. These mortgages made up 23.7% of its gross loans and leases, the third-highest proportion out of the top 20 banks.

Morgan Stanley had the largest year-over-year spike in one- to four-family mortgage originations, at 261.7%.

U.S. Bancorp, RBC US Group hold highest proportion

Of the top 20 US banks by one- to four-family mortgages, U.S. Bancorp had the highest proportion of these mortgages relative to gross loans and leases as of the third quarter, at 34.5%. U.S. Bancorp grew the total amount of these mortgages by 28.7% year over year, partly because it completed its acquisition of MUFG Union Bank NA in December 2022. RBC US Group Holdings LLC had the second-highest proportion with 31.1%, and Citizens Financial Group Inc. had the third-largest amount with 30.4%.

The industry aggregate proportion was 22.8% as of the third quarter.