Feds Want Banks Back in the Mortgage Business, But Will They Come?
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The Trump administration and the Fed want banks to re-enter the mortgage business to make homes more affordable, but banks are hesitant due to concerns over profitability and potential risks. Regulators have rolled back some rules to make lending more attractive to banks, but analysts predict that banks will not rush back into the mortgage business.
The US government wants banks to get back into the mortgage business to increase affordability. After the 2008 financial crisis, banks were required to hold more capital, making mortgage lending costly. Regulators have rolled back some rules to make lending more attractive. However, banks see mortgage lending as less profitable and risky. Non-bank lenders now issue roughly two-thirds of all home loans. The Fed has proposed lowering capital requirements for banks to make lending less expensive.
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