Mortgages increase in Q4'22 amid rising rates

Mortgage rates rose in the fourth quarter of 2022 after a stagnant third quarter, while the total amount of one- to four-family mortgages grew.

As of Feb. 24, the average rate for a 30-year fixed mortgage was 6.38%, while for a 15-year fixed mortgage, it was 5.73%, according to an analysis by S&P Global Market Intelligence. Comparatively, the 30-year rate was 3.66% on Feb. 25, 2022, while the 15-year rate was 2.98%.

Still, the U.S. banking industry posted a 9.1% year-over-year growth in one- to four-family mortgages.

Top 20 banks by 1- to 4-family mortgages

Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. remained the three U.S. banks with the lion's share in one- to four-family mortgages in the fourth quarter. Other than M&T Bank Corp. and U.S. Bancorp, both of which completed acquisitions in 2022, the bank with the largest year-over-year change was First Republic Bank, where these mortgages grew by 27.9%. At UBS Americas Holding LLC, these mortgages grew by 21.2% year over year.

Mortgages grow, delinquencies drop

Total one- to four-family mortgages grew in 2022, reaching $2.752 trillion from $2.524 trillion in 2021. Such mortgages have been hovering over the $2.5 trillion mark in total since 2017. Delinquencies dropped to nearly 2.02% from about 2.70% in 2021.

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In the meantime, the average Federal Housing Finance Agency House Price Index, seasonally adjusted, was up 6.6% year over year, as of Dec. 1, 2022. A month earlier, the index was up 8.3% year over year.

Mortgage downturn

Banks' mortgage-related fee income is expected to remain challenged in 2023 as the lending segment continues to face headwinds.

There have been layoffs in the space recently. Wells Fargo laid off hundreds of mortgage bankers and home loan consultants in February. New York Community Bancorp Inc. is cutting about 69% of Flagstar Bancorp Inc.'s mortgage offices since closing the acquisition, which means about 10% of its combined workforce.

But industry experts say this challenging environment also presents M&A and talent acquisition opportunities for others to gear up ahead of the next up-cycle.