Banks Are Back in the Home Loan Market?
Not too long ago in Banks Leaving the Mortgage Business, I wrote about a report that large #banks have left the home #loan market – originating just 52% mortgages in 2014, down from more than 70% seven years earlier. But bank portfolio loans (the mortgages they make and hold and don’t sell) are rising, growing to 34% of all originations in the first half of 2016 – the most since 2002. Banks have learned that loans made to their most pristine borrowers are profitable enough to make and hold. The lenders obtain a few extra basis points of yield on these types of loans, without needing to offset risk of default by selling off the mortgage. Although the total number of these loans are relatively small, their increase indicates that banks are not giving up on home loans.