Where Would Rates go without the Fed?; CFPB's Reach is Far; MBA Addresses Volker Rule and Margins

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Posted To: Pipeline Press

Here's something to ruminate on: how a traditional bank makes money . Sure they earn some fee income, but banks "sell" money in the form of loans, certificates of deposit (CDs) and other financial products. They make money on the interest they charge on loans because that interest is higher than the interest they pay on depositors' accounts. Now, let's think about Freddie Mac's regular releases noting average mortgage rates (you LO's know what I am talking about - the rate that your borrower sees in the newspaper and wants you to match or beat). Freddie reported that the average 15-yr mortgage was down to 2.69%. For an average bank, to make any decent money it needs a spread of 3% between what it pays for funding (deposits) and what the bank earns on its assets. So at this point, few banks...(read more)

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Source: http://www.mortgagenewsdaily.com/channels/pipelinepress/01042013-volker-rule-cfpb-exam-prep.aspx

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