JBIZNEWS | BANKING & REAL ESTATE | OCTOBER 14, 2026
CHARLOTTE, N.C. — Bank of America reported a 12% decline in home loan production during the third quarter, joining JPMorgan Chase and Wells Fargo in a broader mortgage slowdown as elevated interest rates continue to discourage homebuyers and strain one of the banking industry’s major lending businesses.
The nation’s second-largest bank originated $9.8 billion in home loans between July and September, down from approximately $11.1 billion in the previous quarter. The decline raises questions about whether traditional banks are losing mortgage business to nonbank lenders or simply experiencing the same slowdown affecting the broader housing market.
The figures come as Americans face mortgage rates significantly above the levels available just a few years ago, making monthly payments more expensive and discouraging existing homeowners from selling properties financed at much lower rates.
Three Major Banks Report Mortgage Declines
The weakness extends across some of America’s largest financial institutions.
Bank
Q3 mortgage production
Change from Q2
JPMorgan Chase
$16 billion
−7%
Bank of America
$9.8 billion
−12%
Wells Fargo
$7.8 billion
−13%
JPMorgan remained the largest mortgage originator among the three, although its retail mortgage production fell 18% to $8.7 billion. That decline was partly offset by an increase in loans acquired through correspondent lending channels.
Wells Fargo reported a decline in home lending revenue to $743 million, down 15% from a year earlier.
The figures underscore the pressure facing large banks despite stronger performance in other businesses, including consumer deposits and commercial lending.
Why Mortgage Lending Is Slowing
Higher mortgage rates have reduced the purchasing power of prospective homebuyers, especially first-time purchasers who lack equity from an existing property.
Homeowners who secured mortgages at rates near 3% during the pandemic also face a financial disincentive to move. Purchasing another property could mean replacing an inexpensive mortgage with one carrying a substantially higher rate.
That dynamic reduces housing transactions and limits demand for new mortgages.
The consequences extend beyond banks. Reduced home purchases can affect real estate brokerages, title companies, mortgage processors, home improvement businesses and other industries dependent on residential transactions.
Bank of America’s Mortgage Business Shows Mixed Results
Bank of America’s traditional first-lien mortgage originations declined to $6.8 billion from $8.2 billion in the second quarter.
However, home equity lending increased slightly, reaching $2.9 billion compared with $2.8 billion previously.
That contrast suggests some existing homeowners are continuing to borrow against the equity in their properties rather than sell or refinance their low-rate mortgages.
Bank of America also reported third-quarter net income of $6.9 billion, down from $8.3 billion a year earlier, after substantial regulatory penalties related to anti-money-laundering and sanctions compliance failures.
The mortgage slowdown, therefore, comes as the bank faces additional pressures outside its housing operations.
Are Traditional Banks Losing Market Share?
One of the larger questions facing the mortgage industry is whether the decline at major banks reflects weaker demand or a continued shift toward independent mortgage companies.
Nonbank lenders operate without the same deposit-taking structure as traditional banks and have become major competitors in mortgage origination.
Analysts at Keefe, Bruyette & Woods said the reported declines were generally consistent with broader industry projections.
The Mortgage Bankers Association had projected an 8.5% quarterly decline in mortgage originations, while Fannie Mae forecast a 7% decrease.
Those estimates suggest that a substantial part of the banks’ weaker production reflects market conditions rather than necessarily a loss of competitive position.
Still, individual bank declines exceeding industry forecasts could prompt closer examination of lending strategies, pricing and distribution.
What It Means for Homebuyers and the Economy
For consumers, weaker mortgage activity does not automatically translate into cheaper loans.
Mortgage rates are heavily influenced by Treasury yields, inflation expectations and investors’ demand for mortgage-backed securities. Banks can compete more aggressively for customers, but those broader financial conditions remain important determinants of borrowing costs.
For the housing industry, sustained weakness in mortgage production could mean fewer transactions, slower activity for real estate service companies and continued difficulties for families trying to purchase homes.
The next test will be whether mortgage rates ease enough to bring buyers back into the market or remain elevated through the end of the year.
For banks, the challenge is equally clear: protecting mortgage profitability while competing for fewer transactions, without sacrificing lending standards.
JBizNews Desk | Charlotte, North Carolina
© 2026 JBizNews. All Rights Reserved.
