JPMorgan: At or above current mortgage rates "refinance volumes and margins will be under pressure"

A few excerpts from the JPMorgan investor presentation (Q2 results):

Mortgage Production pretax income of $582mm, down $349mm YoY, reflecting lower margins and higher expense, partially offset by higher volumes and lower repurchase losses

Mortgage originations of $49.0B, up 12% YoY and down 7% QoQ

Purchase originations of $17.4B, up 50% YoY and 44% QoQ
...
If charge-offs and delinquencies continue to trend down, there will be continued reserve reductions

Realized repurchase losses may be offset by reserve reductions based on current trends

If primary mortgage rates remain at or above current levels, refinance volumes and margins will be under pressure and Mortgage Production profitability will be challenged
emphasis added

Click on graph for larger image.

This graph is from the JPMorgan presentation this morning. The good news is mortgage delinquencies are trending down, and purchases originations are up sharply year-over-year.

However the refinance volumes and margins will probably fall off a cliff in Q3.