Booming banks say consumers may not see lower mortgage rates
JPMorgan Chase and Wells Fargo, the nation’s largest mortgage lenders, said Friday they won’t make home loans much cheaper for consumers, even as they reported booming profits from that business.
Those bottom lines have been padded by federal initiatives to stimulate the economy. The Federal Reserve is spending $40 billion a month to reduce mortgage rates to encourage Americans to buy homes. Instead, its policies may be generating more benefits for banks than borrowers.
“The government can’t force banks to give out loans at lower rates any more than they can force Macy’s to sell me sheets for a dollar,” said Karen Shaw Petrou, managing partner at consulting firm Federal Financial Analytics.
Since the Fed announced its mortgage initiative, rates have ticked down. But banking analysts say the cost of issuing the loans has fallen much more, significantly boosting bank profits....
Dr. Alan Cairns | 3/9/2009
