The average fixed rate on a 30-year mortgage fell to 3.38 percent Sept. 26, according to Bankrate.com. Nationwide originations probably climbed 33 percent in the third quarter from a year earlier to $412 billion, according to estimates from the Washington-based Mortgage Bankers Association.
Mortgages have also brought U.S. banks more than $84 billion in costs tied to shoddy home loans and foreclosures since the start of 2007, according to data compiled by Bloomberg.
Wells Fargo was sued by the U.S. for hundreds of millions of dollars in damages this week over claims the bank made reckless mortgage loans that defaulted and caused losses for a federal insurance program. The conduct spanned more than a decade, according to a statement from U.S. Attorney Preet Bharara. Wells Fargo denied any wrongdoing and said it will vigorously defend itself.
Wells Fargo shares had gained 28 percent this year through yesterday, bringing the firm’s market value to about $186 billion, the highest for any U.S.-based bank. Berkshire Hathaway Inc., run by billionaire Warren Buffett, is the biggest stockholder with more than 7 percent of the common shares, according to data compiled by Bloomberg.
Analysts and investors are looking for signs that banks will be able to produce a sustained and more diverse stream of revenue in a U.S. economy that’s expanding at less than 2 percent annually. The 25 largest commercial banks held $4.13 trillion in loans and leases in the week ended Sept. 26, a 0.7 percent gain from the end of June, according to the Federal Reserve. Commercial and industrial loans climbed 3 percent over the same period to $794 billion, central bank data show.