Falling long-term bond yields are pressuring banks, but there is a potential bright spot: Lower rates are spurring people to refinance mortgages and buy new homes.
Wells Fargo & Co., the nation’s largest mortgage lender by origination volume, said Thursday that it expects mortgage volume industry-wide to be 20% to 25% higher for the year than the roughly $1.5 trillion it initially anticipated. J.P. Morgan Chase & Co., the second-largest mortgage lender, also said Thursday that industry volume could be up by 50% this year from initial forecasts.
The Mortgage Bankers Association boosted the share of refinancing activity. It now expects that to be nearly 40% of total activity. While that is nowhere near the peak of 71% in 2012, it is up from 33% in the group’s January forecast.
The pickup in refinancing marks a surprising turnaround for the mortgage industry. Lenders had expected mortgage rates to rise following the Federal Reserve’s rate increase in December. Instead, after a brief pickup in the weeks that followed, rates began to decline over concerns about U.S. and global growth, the oil-price slump and China’s slowing economy.
Information from The Wall Street Journal
