US Banks lost Money on Home Loans for the 1st time
The American Mortgage Bankers Association (MBA) has released a report stating that independent mortgage banks and their subsidiaries in the US have lost an average of $301 on each home loan they funded in 2022.
This is a stark contrast to the situation in 2021, where banks in the US made an average of $2,339 on each home loan they funded. Mortgage companies and banks in the US have financed an average of $2.6 billion in home loans in 2022, a figure that is barely half of what was achieved in 2021 ($5 billion).
The cost of financing a home loan has also increased, averaging $10,624 in 2022. This is a 23% increase from the previous year. This could signal that banks are no longer confident about funding home loans, particularly with the uncertainty around the US housing market.
The decline in profits can be attributed to the overall economic outlook, with some experts warning that the US housing market could face significant challenges ahead. MBA predicts that house prices could fall by 9% in 2023. This could well be an indication that the US housing market is headed for a major correction, which could lead to lower demand and, in turn, lower home prices.
Of course, this hasn't stopped other experts from predicting a softer price correction, saying that the price has bottomed, and the market may soon recover. But, with the gloomy economic outlook, only time will tell what the future holds for the US housing market. For now, banks and mortgage companies may need to brace themselves for an uncertain period ahead.
US Banks lost Money on Home Loans for the 1st time
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