Interesting SL Post Discusses Why Banks May Be Surprisingly Profitable in 2012

[BargainValueHunter]

http://soberlook.com/2012/09/spread-between-mortgage-rates-and-mbs.html

 

That means banks are not in a hurry to provide new loans and have little incentive to lower rates further (a company that receives more orders than it can handle is unlikely to lower prices.) Banks also stand to make more money by accumulating high rate mortgages and selling them at a premium. Financial shares have risen materially on the back of this development. In fact the longer this spread can be maintained, the more profitable banks will be this year. With the Fed buying so much MBS (see discussion), the "transmission" issue will likely be with us for some time, as waves of people attempt to refinance.