Recovering Housing Market Still Poses Problem for Banks

From Low interest rates and weak new mortgage volume continue to depress revenue at U.S. banks as the housing market begins tentative steps toward recovery, according to Standard & Poor’s.The picture is even worse considering these banks need higher reserves to cover representation and warranty claims made on previously originated mortgages.

Further, the ratings agency expects home prices, as measured by the S&P/Case-Shiller 20-city index, to fall another 4%. Analysts in another department at S&P expect the index will decline about 1% for January. The next S&P/Case-Shiller report is due March 27.

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