The long-anticipated collapse in mortgage applications, finally a reality, stands to take a bite out of bank earnings in the second quarter and beyond.

There is an upside in higher interest rates for home lenders. Mortgages are likely to stay in servicing portfolios for longer, for instance. But the sudden crash in volume in May and June complicates an orderly transition from a period of fat origination revenues. (The following graphic shows data on loan volume and profit margins. Interactive controls are described in the caption. Text continues below.)

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