Banks are giving investors a heads up that home-loan profits will fall.
JPMorgan Chase expects to lose money on its mortgage-origination business for the rest of the year. Bank of America cut 2,100 of its employees due to a drop in refinancing activity, and is closing 16 of its mortgage offices, a spokesperson said. And investors are concerned that the surge in interest rates will prompt the Federal Reserve to move to decreasing the $85-billion-a-month bond-buying program intending to give the economy a boost.
Wells Fargo’s chief financial officer Tim Sloan, on the other hand, said the spike in rates will not delay the U.S. housing recovery, as previously reported.
Nevertheless, the mortgage company is projecting a decrease of nearly 30 percent in mortgage originations in the third quarter – to $80 billion. Mortgage originations were at $112 billion in the second quarter. [WSJ] — Mark Maurer