2008 saw a huge shakeout in the mortgage industry as those banks that profited off of subprime loans disappeared or merged with stronger institutions.
Now with the subprime business off the books and home prices discounted, banks that have a strong balance sheet are looking to loan. The profits subsidized by the government are making good loans highly profitable.
The Navy Federal Credit Union just announced they are increasing their lending to 6 billion dollars for 2009. Listen to their reasoning.
Mortgage originations totaled more than $5.7 billion last year — the second-highest year for originations in Navy Federal’s 75-year history.
“Navy Federal never engaged in sub-prime mortgage lending,” said Cutler Dawson, CEO of the Vienna, Va.-based credit union, in a statement. “As a result, we saw a strong ‘return to trust’ in 2008, and we’re committed to continuing that momentum in 2009.” via Baltimore Business Journal:.
This could be great news for the housing industry if banks are showing this much confidence in their lending ability.
[...] If you’re new here, you may want to subscribe to my RSS feed. Thanks for visiting!So we have finally flushed most of the bad debt out of our system in 2008. The bad lenders are disappearing and lenders are feeling good about making new loans. [...]
This is clearly not surprising. Banks that have conducted business under standard procedures and assumptions are going to continue to do well.