Wells Fargo, the largest US mortgage lender, today reported a better than expected quarterly profit as revenue from mortgage banking rose after four quarters of decline.
Lower mortgage rates increased demand for refinancing in the first quarter, breathing some life into the US mortgage market, which has been sluggish over the past year.
The average 30-year mortgage rate fell to as low as 3.59% in the first quarter of 2015, the lowest since May 2013, according to the Federal Home Loan Mortgage Corporation.
Rates averaged 4.35% on a monthly basis the same time the previous year.
"Our mortgage business was able to serve more customers by refinancing their mortgage loans with lower rates," Wells Fargo Chief Executive John Stumpf said.
Revenue from mortgage lending rose 2.4% to $1.55 billion in the first quarter ended March 31, accounting for 14.6% of the bank's non-interest income.
Wells Fargo said mortgage applications in the pipeline rose to $44 billion as of March 31 from $26 billion at the end of December.
JP Morgan Chase & Co, which also reported results today, said net income from mortgage banking rose nearly three-fold in the first quarter.
Non-interest expense rose about 5% to $12.51 billion, mainly due to a rise in employee incentives and benefits.
Revenue for the three month period rose 3% to $21.28 billion.
Analysts on average had expected earnings of 98 cents per share and revenue of $21.24 billion, according to Thomson Reuters I/B/E/S.
Wells Fargo's income from credit cards, one of the bank's major areas of expansion, rose 11% to $871m in the first quarter.
