This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Banks Bounce Back, Modestly: Financial Winners

Mortgage loan rates have been rising rapidly, in line with the market yield on 10-year U.S. Treasury bonds, which have risen to 2.79% Wednesday afternoon from 1.70% at the end of April. The market has been anticipating a decline in the Federal Reserve's net purchases of long-term bonds. The Fed, as part of its "QE3" effort to hold-down long-term interest rates, has purchased $40 billion in long-term mortgage-backed securities and $45 billion in long-term U.S. Treasury bonds each month since last September.

The Federal Open Market Committee is expected by many economists to gradually taper its bond-buying after the committee's next meeting on September 17-18.

The resulting media hysteria over expectations of the Fed curtailing its monetary stimulus will most likely resume after Labor Day and hit a fever pitch in the second week of September.

Also on Wednesday, the National Association of Realtors said its Pending Sales Index declined to 109.5 in July from 110.9 in June, although the index was still 6.7% higher than a year earlier. NAR chief economist Lawrence Yun said the small decline in existing-home sales "is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown." But Yun also said "higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West."

"So far in 3Q, higher mortgage rates have driven mortgage app volume down 36% Q-Q (on avg.), and we anticipate banks will see a sharp decline in mortgage banking fees this quarter as a result," Jefferies analyst Ken Usdin wrote in a note to clients Wednesday.

More Skin in the Game

In industry news on Wednesday, the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and other federal agencies proposed that aside from "qualified residential mortgage loans," or QRM, mortgage loan securitizers should be required to retain 5% of the credit risk of the loans the sell through securitizations. The rules are subject to a 60-day comment period, but as we have seen with so many rules proposed to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, it may take much longer for the final rule to be set.

2 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
NYCB $16.91 0.00%
JPM $60.96 0.00%
FNFG $8.95 0.00%
CBSH $42.66 0.00%
ZION $27.00 0.00%


DOW 17,976.31 +263.65 1.49%
S&P 500 2,086.24 +25.22 1.22%
NASDAQ 4,947.4410 +56.2220 1.15%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs