Categorized | Finance and Mortgage

Mortgage Lenders Showing Strong Gains in Profit

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After years of struggling and fears of collapse, the majority of banks in the United States have seen their mortgage lending divisions growing extremely profitable in the last year. Mortgage lenders continue to outperform expectations despite dealing with near record-low mortgage rates, and stricter lending criteria.

 

Wells Fargo saw its net gains on mortgage-loan origination and sales activities grow to be twice what they were last year. They have, by far, the largest share of the current mortgage market. Even a bank like Bank of America posted its highest income numbers, despite having its lowest mortgage production in more than five quarters.

 

As one might expected, the public is not exactly applauding the banks for achieving their profitable numbers. In fact, it is quite the opposite. Many believe that the banks should lower mortgage loan interest rates even further to well below four percent. Additionally, people believe that the lending criteria of banks are too strict, and that lenders should start to grow more lax on the qualifications needed for approval.

 

However, lenders believe that tougher lending criteria will ultimately be better for the mortgage market as a whole. While less people will be approved for mortgages, there will be less dependency on the government for mortgage guarantees. By approving fewer loans, mortgage lenders are able to eliminate the amount of work needed to stay afloat while growing even more profitable.

 

The mortgage market has clearly changed over the last year, and while the general public may be critical of their operations, they are certainly growing more profitable.

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About Drew Wilson

Drew focuses on the Commercial and Mortgage/Finance categories.

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