Wednesday, April 18, 2018
Business

JPMorgan Chase, Wells Fargo earnings show mortgage markets improving

NEW YORK — Earnings reports Friday from two major banks painted a picture of a healing housing market, with more Americans taking out mortgages, paying them on time and taking advantage of low interest rates to refinance.

At JPMorgan Chase, the biggest U.S. bank, income from new home loans set a record from January through March. The bank issued 6 percent more mortgages than a year ago and got 33 percent more applications.

Wells Fargo, which issues the most home loans, booked the most mortgage fees since 2009. It issued 54 percent more mortgages than a year ago and took 84 percent more applications.

A healthier housing market is welcome news. Housing has been the biggest drag on the economic recovery, while other segments, such as manufacturing and consumer spending, have held up or grown.

Home prices are still falling, though more slowly than in the past several years, and more than half a million American homes were in the foreclosure process at the end of March, according to RealtyTrac.

Still, stronger mortgage business helped JPMorgan and Wells Fargo beat Wall Street expectations for first-quarter earnings.

Two key factors helped:

• The average rate on the 30-year fixed mortgage dropped to 3.87 percent in February, the lowest since long-term mortgages began in the 1950s. Rates have stayed low: This week, the average stands at 3.88 percent.

• Job growth in January and February was some of the strongest since the Great Recession, and the unemployment rate has fallen to 8.2 percent, the lowest since January 2009.

At Wells Fargo, 15 percent of mortgage applications came from the government's Home Affordable Refinance Program, which helps Americans who owe more than their property is worth get more affordable loans.

"It is great to see people who have made their payments every month even though they are underwater, or hugely underwater," CEO John Stumpf said. "And now to be able to help them put a few hundred dollars extra in their pocket every month, that is terrific."

JPMorgan Chase, the largest U.S. bank by assets, turned a $5.4 billion profit for the quarter, down 3 percent from last year but ahead of Wall Street estimates. Wells Fargo made $4 billion, up from $3.6 billion a year ago.

Large banks serve as a barometer of the economy. Citigroup, Bank of America, Goldman Sachs and Morgan Stanley report their results for the first quarter next week.

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