The stars seem to be aligning in the housing market. Home prices have been rising for many months, and the federal government is providing immense support to bolster the mortgage market. The big banks that make home loans are strong enough to provide credit to borrowers, as seen in the fourth-quarter results reported Tuesday by JPMorgan Chase and Wells Fargo.
Yet despite the confluence of promising signs, little in the vast system that provides Americans with mortgages has returned to normal since the 2008 financial crisis, leaving a large swath of people virtually shut out of the market. Even as the housing market improves, new home loans are still scarce as interest rates have started to creep up — a situation that was starkly underlined in the two banks’ results on Tuesday. The nation’s biggest mortgage lender, Wells Fargo, extended $50 billion in mortgages in the fourth quarter, down 60 percent from a year ago.
The nation’s largest bank, JPMorgan, for its part, extended $23 billion in mortgages, down 55 percent from a year ago. The declines reflected the waning of the refinancing boom prompted by record low interest rates. Without substantial income from refinancing, the banks’ mortgage businesses will now depend on making fresh loans to purchase houses, a business that, despite some revival, remains tepid.