Banks: Positive for Housing Rebound

JPMorgan Chase & Co. and Wells Fargo & Co., the nation's largest home lenders, said America's long-suffering housing market may be on the mend.

The big jump in profit was thanks largely to a surge in their mortgage businesses, fueled by low interest rates and waves of refinancing.

It led JPMorgan Chief Executive Jamie Dimon, considered one of Wall Street's most high-profile bankers, to declare: "We believe the housing market has turned the corner."

Home lending is booming. The banks said profits on the sale of home loans were twice as high as traditional levels as the Federal Reserve kept interest rates at historical lows to help stimulate the economy.

JPMorgan and Wells Fargo, which emerged from the financial crisis as two of the strongest U.S. banks, control nearly half of the nation's mortgage volume. They reported a surge in revenue from mortgage origination and servicing during the last three months.

Wells said it issued $139 billion in mortgages from July through September, compared with $89 billion in the same period last year. JPMorgan wrote $47 billion in mortgages, compared with $37 billion last year.

There were some signs, though, that the boom isn't as strong as it might seem. The large majority of mortgage lending was driven not by people buying new homes but by owners refinancing mortgages, which is less helpful to the housing market.

Still, the numbers were eye-catching.

At Wells Fargo, mortgage business revenue rose 55% to $2.8 billion during the third quarter from $1.8 billion in the year-earlier period. The San Francisco bank posted an overall profit of $3.94 billion, which easily surpassed Wall Street projections.

Economists have been predicting that any lift in the housing market could boost the broader economy. When homeowners have more equity in their homes or gain extra cash from a refinancing, it tends to free up more money — and that boosts consumer spending.

The top executives of JPMorgan and Wells Fargo said housing still has room to recover further.

Source: latimes.com

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