Big banks feel the mortgage squeeze in Q1, hope for deregulation

While mortgage production remained under pressure at top banks in the first quarter of 2025—aligning with market expectations—uncertainty looms over what the future may hold.

Bank executives anticipate negative impacts from the ongoing trade war sparked by President Trump’s increase in tariffs. However, they remain hopeful that a potential deregulatory agenda from the current administration could boost lending activity.

“The economy is facing considerable turbulence (including geopolitics), with the potential positives of tax reform and deregulation and the potential negatives of tariffs and ‘trade wars,’ ongoing sticky inflation, high fiscal deficits and still rather high asset prices and volatility,” Jamie Dimon, the head of JPMorgan Chase, said in a statement. 

In his annual letter to shareholders, the head of JPMorgan Chase warns Trump’s tariffs could fuel inflation and slow down economy. He also said a regulatory rollback would cut mortgage costs by up to 80 basis points.

In this context, JPMorgan reported mortgage volumes of $9.4 billion in Q1 2025, down 22% from the prior quarter but up 42% year over year.

Most of the business came from the retail channel, which totaled $5.5 billion in home loans in Q1 2025—a 29% drop from the previous quarter but a 25% increase from the same period last year. Meanwhile, the correspondent channel reached $3.9 billion, representing an 11% quarterly decline and a 42% annual increase.

As for servicing, JPMorgan’s mortgage servicing rights stood at $9.1 billion in Q1 2025, up from $8.6 billion in Q1 2024. 

At Wells Fargo, CEO Charlie Scharf told analysts on Friday that the bank supports the administration’s deregulatory agenda, which would enable the bank to “make more loans, take more deposits, and provide more liquidity to the markets, while still preserving robust regulatory oversight.”

In a speech this week, Scott Bessent, secretary of the U.S. Department of the Treasury, was critical of the increasing role that independent mortgage banks (IMBs) are playing in the mortgage industry. “When considering the effects of bank regulation on community banks, we should ask ourselves why so much financial activity has moved out of the regulated banking system,” Bessent said. 

On the topic of trade policy, Scharf said the bank supports the administration’s willingness to “look at barriers to fair trade for the United States.” 

“Though there are certainly risks associated with such significant actions, and we see concern playing out in the markets and the economic uncertainty that now exists. Timely resolution, which benefits the US would be good for businesses, consumers and the markets.” 

Like JPMorgan Chase, Wells Fargo also kicked off mortgage earnings season on Friday, giving analysts early insights ahead of nonbank lenders’ reports. Wells Fargo’s mortgage volume fell to $4.4 billion in Q1, a 25% quarterly decline, though still up 26% year over year.

Wells Fargo’s mortgage servicing rights—the carrying value at the end of the period—fell 5% from the prior quarter to $6.5 billion in Q1 2025. Compared to Q1 2024, the unpaid principal balance (UPB) declined by 10%.

Mortgage earnings

Wells Fargo recorded $866 million in revenues related to its home lending business in Q1 2025, a 1% increase from the prior quarter and slightly above the $864 million posted in the opening quarter of 2024. The bank said in its earnings release that revenue in “home lending was stable and included higher mortgage banking fees and lower net interest income on lower loan balances.” 

The bank’s net servicing income increased 41% quarter over quarter and 99% year over year to $181 million. Mortgage banking non-interest income at Wells Fargo came in at $332 million in Q1 2025, an increase from $294 million in the previous quarter and from $230 million in the same period of 2024.

Meanwhile, JPMorgan Chase’s home lending net revenue reached $1.2 billion in Q1 2025, a decrease of 7% from the previous quarter and an increase of 2% compared to the same quarter last year. Net mortgage servicing revenues at JPMorgan came in at $153 million in Q1 2025, compared to $182 million in Q4 2024. In Q1 2024, these revenues came in at $144 million. 

Overall, Wells Fargo delivered a $4.8 billion profit in Q1 2025, compared to $4.6 billion in the same quarter of 2024. Revenues from January to March were $20.1 billion, up from $20.8 billion in the same period last year. At JPMorgan, the $14.6 billion net income in the first quarter was higher than the $14 billion in Q4 2024 and the $13.4 billion in Q1 2024.   

Looking forward, Dimon said: “As always, we hope for the best but prepare the firm for a wide range of scenarios.” Meanwhile, Scharf noted, “We are prepared for a slower economic environment in 2025, but the actual outcome will be dependent on the results and timing of policy changes.”