Though real estate investing in the US has become a dangerous market, US banks are seeing a glimmer of hope as mortgage lending in the first few months this year surged in number. The lowered bank rates encouraged citizens to refinance and restructure home loans. HomeUnion real estate investing is seeing this development as a sign of an improvement of market investing ahead.
The banks earning on mortgages jumped high and earnings were also boost by the higher number of trades in bond and the increasing underwriting revenue from such trades. The banking giants will start to report their earnings next week. The banks are expected to report big profits which will exclude one-time items. This prediction is according to a forecast made by an analyst at Thomson Reuters. The analyst further said that banks are recuperating well in the mortgage sector.
An equity research analyst said that the numbers in mortgage banking are very strong. The revenue from this particular sector is expected to exceed the expectations of bankers.
Mortgage banking is further strengthened by the falling interest in borrowing. The average mortgage rate fell to 3.63 percent during the first quarter of this year. This was according to a mortgage market survey conducted by Freddie Mac. This slide down is the lowest since May 2013. This is in contrast to last year’s when the rates were on the higher spectrum.
Why did the interest rates fell? The interest rates dove down with the slow growth in Europe and Asia, this phenomenon encouraged investors to buy US debt. With the decline in interests, the index of the Mortgage Bankers Association of applications to refinance various mortgages doubled significantly from December 2014 towards the middle of January 2015. It would a considerable amount of time to close the mortgages and turn them into fees for the bank but at least a few of the loans are expected to close during the quarter. The mortgages that did not close in the first quarter will help in boosting profits for the second quarter. The cost cuts and multiple layoffs last year could become a huge profit for some banks.