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JPMorgan Chase<\/strong> increased originations by 21% over the fourth quarter of 2020, but compressed margins ate away at the bank’s mortgage profits in the first quarter of 2021.<\/p>\n The New York-headquartered bank originated $39.3 billion in home loans during the first quarter, a big jump from the $32.5 billion originated in the prior quarter. Notably, JPMorgan grew mortgage originations in both its retail division \u2013 $23 billion in Q1, up 14% from $20.1 billion in Q4 \u2013 and its correspondent channel<\/a>, which rose to $16.3 billion in Q1 from $12.4 billion in the fourth quarter (31%).<\/p>\n Production revenue from mortgage fees and related income declined to $757 million from $803 million in the fourth quarter. It had 178,776 home loans on its balance sheet at the end of the quarter.<\/p>\n According to its earnings statement, JPMorgan posted revenue of $1.458 billion in the first quarter, roughly even with the fourth quarter (overall revenue in its consumer business, which includes credit cards and auto loans, declined 6%). <\/p>\n Gain-on-sale margins on home loans fell to 193 basis points in the fourth quarter, a drop of 54 basis points from the fourth quarter. Its mortgage servicing rights valuation was up 38% from the prior quarter, above Wall Street’s expectations. The bank also pared back its allowance for credit losses in home lending to $1.4 billion.<\/p>\n Bose George, an analyst at Keefe, Bruyette & Woods<\/strong>, said in a note Wednesday that the decline in margins was mostly due to market factors as primary\/secondary spreads narrowed considerably during the quarter. He also partly attributed the decline to the share of retail \u2013 a higher margin business \u2013 to correspondent, a lower margin line.<\/p>\n According to recently released HMDA data<\/a>, JPMorgan Chase’s mortgage origination volume for single-family lending issued 224,833 loans totaling $95.6 billion. The company’s average loan size in 2020 was $425,306, highest among the top 50 single-family lenders of 2020.<\/p>\n In a note to shareholders last week, CEO Jamie Dimon said he believes the economy is about to enter a “Goldilocks moment”<\/a> of rapid growth alongside slowly rising inflation and interest rates. <\/p>\n Though JPMorgan’s mortgage origination business didn’t catch fire in the first quarter, the bank made a record $3 billion in investment-banking fees. <\/p>\n <\/em><\/p>\n The post JPMorgan Chase’s mortgage margins narrow in Q1<\/a> appeared first on HousingWire<\/a>.<\/p>\n