Chicago, IL (PRWEB) October 19, 2012
REMI released its opinion of JPMorgan Chase and Wells Fargo’s decision to not translate their recent profits from home loans into lower interest rates for their customers, saying it could harm home prices by keeping consumers unwilling or unable to take on new loans.
On Friday, on the Washington Post (Article: Fed actions to reduce mortgage rates may be helping banks more than borrowers), JPMorgan Chase and Wells Fargo, the two American mortgage giants, released their reports from the third quarter of 2012. Both banks met with huge profit gains from mortgages: for JPMorgan’s third quarter earnings from mortgages was up 57 percent compared with the third quarter of 2011, while Wells Fargo saw a 50 percent increase in a similar timespan. While spokesmen for both banks praised the economic recovery and expressed high hopes for the housing market, both also stated unequivocally that consumers shouldn’t expect lower rates on their online real estate training home loans. Timothy Sloan, CFO of Wells Fargo, said Friday that the company considered lowering prices not to be a “a good decision from a profit standpoint.”
The banks evidently are hesitate to lower rates based on high demand for new mortgages as the san diego beach rental industry begins to pick up again. However, that may not be the whole story; a large portion of this profit margin comes from a widened gap between the profit from interest rates on mortgages, which has stayed constant, and the amount due from banks to mortgage financiers, which has lowered significantly, largely because of preemptive actions by the Fed.
Analysts estimate that were JPMorgan Chase and Wells Fargo to lower its interest rates in light of this huge profit, mortgage and refinance applications would “explode.” This proved a problem for Wells Fargo in September, when the bank was overrun with customers and had to raise rates to decrease the enthusiasm of new buyers. The banks, by and large, do not anticipate that demand will decrease based on their interest rates. As a consequence, they have no plans to lower rates, but economists note the presence of smaller mortgage lenders like credit unions who may be able to undercut the big banks on mortgage rates and force their hand.
REMI issued a statement denouncing decisions by JPMorgan Chase and Wells Fargo, the two major mortgage lenders in America, to maintain the current interest rates on their mortgage loans despite posting huge profits for the third quarter of 2012. The lenders are enjoying increased revenue thanks to greater demand for new mortgages and federal policy affecting the economy.
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