On: Mortgages are a manufactured product (2022)

[epolanski]

In Europe (or at least Italy and Poland which I know a bit) mortgages are mostly instruments to get new clients.

Banks barely make any money at all from mortgages, but they can then upsell you other things.

Mortgages rates depend on lending rates published by the European Central Bank, and on top of that banks apply a small spread (generally below 1%).

But they don't love the instrument at all, it doesn't make much money if any.

[grob-gambit → epolanski]

In the US, mortgage banking is about 20% or so of a regional bank on up in terms of revenue generation.

Modern banking is an incredibly complex business so you could basically say no single division makes much money vs the other parts as a whole.

I think that would be a wrong way to view the business though. As if banks would not be in mortgage lending if they could. It is quite the opposite, any one bank would love for the other banks to get out of mortgage lending.

[notfromhere → grob-gambit]

Banks in the us usually just originate them then promptly sell them to Fannie May. Otherwise they just handle payments, etc.

[Ylpertnodi → epolanski]

My .it bank is making bundle off me.