Banks mortgage numbers rise as new home building surges
San Francisco, CA -- (SBWIRE) -- 01/23/2013 -- The United States Market is seeing signs of a strong surge back to a strong economy much faster than many experts had predicted. Banks in the U.S., as well as homeowners, are reaping the benefits of the sudden turnaround. However, a large group of homeowners at the the bottom of the financial food-chain are still dealing with a mess high number of foreclosures and lacking access to loans.
Illuminating the housing turnaround was the homebuilders numbers for new homes that caught even economists off-guard. “Housing stats are off the charts,” stated Patrick Newport, a U.S. Economist for IHS Global Insight. The U.S. Housing starts, which measures new construction, has seen a boom since the waning month of 2012, and nearly 1 million homes have been started. That is the highest in four years. Economists expected that a mere 890,000 homes would be started in that time period.
The reason for the jump are more than just one aspect, say Jim O'Sullivan, the chief U.S. Economist for High-Frequency Economics. He noted better weather as just one of the many reasons. Newport at IHS, suggested that rebuilding after Hurricane Sandy also likely bolstered the numbers.
Despite the explanations, the trend was not over a solitary single month, and so there will not be one overriding answer to why the change has been occurring. However, recovery has been well underway since last year. Home-building permits reached their highest point since 2008, while builders have seen financial encouragement for efforts as stocks reach new fights.
Likewise, banks are seeing financial benefits from the upturn. Bank of America has signed 42% more mortgages in 2012, while JP Morgan, saw its own mortgage unit move up from $269 million loss to a $418 profit over the last year.
While all this is good news, on the other end of the spectrum banks are slowing their mortgage application totals as they are being more careful. Banks are less likely now to take the risks they once did, choosing only the strongest borrowers. Equifax and Moody's numbers seem to indicate that is likely not the case, however. Instead, it could be that banks are simply overwhelmed by volume due to the upturned economy, and thus simply are turning down some due to sheer numbers.
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