Refi wave pushes mortgage business to new highs
Bank of America’s mortgage operation turned in record results for the second quarter of 2003, riding one of the strongest refinance waves in history.
In a press release dated 14 July 2003, the Charlotte-based banking giant reported record earnings of $2.74 billion for the quarter and highlighted the mortgage unit as a major contributor. Mortgage banking income quadrupled to about $559 million, up more than 300% from a year earlier, as homeowners rushed to lock in low rates.
Originations hit record $40 billion
On the volume side, mortgage originations reached a record $40 billion in the quarter, another all-time high for the bank. Management pointed to strong refinance activity and brisk demand for home-equity and other consumer real-estate products as key drivers.
The performance helped push revenue in the broader consumer and commercial banking division up double-digits, with mortgage, card and investment banking all posting record revenue lines.
What the records signalled for the market
For Mortgage Daily readers, Bank of America’s numbers underscored just how powerful the early-2000s refi boom had become:
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Big banks with national retail distribution were capturing huge mortgage volumes.
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Mortgage banking income was highly leveraged to rate-driven refinancing, with quarter-on-quarter swings measured in hundreds of millions of dollars.
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Servicing and prepayment risk were becoming bigger strategic issues as portfolios turned over more quickly.
In mid-2003, at least, the mortgage segment at Bank of America was firmly in record-breaking territory.
