Banks Find Record Profits From Mortgages
October 16, 2012
Wells Fargo & Co. and J.P. Morgan Chase are reporting record profits in the last three months, and they’re attributing it to a rise in mortgage lending, Reuters reports.
“Both banks reported double-digit increases in third-quarter earnings, as record-low interest rates and an uptick in the housing market drove a boom in mortgages,” Reuters reports.
As interest rates have fallen, mortgage applications have soared. Wells Fargo, the largest lender in the nation by a large margin, netted $139 billion in mortgages in the three months ending in September, up from $50 billion a year earlier.
However, banking officials and analysts are concerned the higher profits aren’t sustainable.
"We don't expect to count on high margins and mortgage origination forever," says J.P. Morgan Chief Executive Jamie Dimon. Dimon adds that the surge in refinancing will likely continue for the next “couple of quarters but it won’t last much longer.”
Source: “Mortgage Boom Leads to Profit Surge for JPMorgan, Wells,” Reuters (Oct. 12, 2012)
Updated: June 20, 2018