St Casimirs Mortgage Minute

Banks Are Falling Back in Love With Mortgages

The biggest U.S. banks are taking advantage of improvements in the nation's housing market. The S&P/Case-Shiller Home Price Index, released April 26, indicates that home prices across the United States climbed 5.3 percent in February on a year-over-year basis, and the National Association of Realtors reported a 5.1 percent increase in existing-home sales in March following a decline in February. Banks are responding to the market's gains by making more mortgages and keeping more of them on their books, rather than selling them to Fannie Mae and Freddie Mac. According to the Federal Reserve, U.S. banks held 31.7 percent of outstanding mortgage debt as of October 2015, up from 30.9 percent in October 2014 and marking the highest level since April 2009. This trend appears to have continued into the first quarter of 2016, with the share of mortgages held by JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo up 28 percent on a year-over-year basis. Barclays analyst Jason Goldberg says Chase reported a 37 percent increase in mortgages held, as it has been aggressive in making and retaining jumbo mortgages. Experts say this strategy allows banks to put their deposits to work.

From "Banks Are Falling Back in Love With Mortgages"
Wall Street Journal (04/27/16) P. C12 Back, Aaron