NEW YORK (TheStreet) -- Wells Fargo (WFC) and US Bancorp (USB) are among banks expected to benefit from strong quarter mortgage banking revenues, as federal stimulus and rising asset values continue to boost results.
Morgan Stanley analyst Betsy Graseck estimates mortgage revenues will rise 34% in the third quarter compared to the third quarter of 2011, though she believes it will be lower than the second quarter. She argues lower interest rates will stimulate refinancing activity. She also sees continued benefits from a government refinancing program known as HARP 2.0, as well as strong gains for banks on the sale of assets.
Graseck recommends SunTrust Banks (WFC), Wells Fargo and US Bancorp as the best way to invest in expected strong mortgage revenues since mortgage banking makes up the largest percentage of their overall revenues.
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