The One-Percenters Are Doing Very, Very Well -- Gonna Be A Lot of Bonuses At The End of The Year -- Even Without Robo-Signers

Good, bad, or indifferent, the Fed is helping investors.

Banks reap profits on mortgages following QE3 -- Financial Times.

Earlier I posted a link to a story suggesting that, "secretly," Wall Street loves President Obama. They should. Investors are doing very, very well. Savers are getting stomped. (If you have money in a money market account, check your return.)

Bank profits from new mortgages have soared since the Federal Reserve began its third round of bond purchases two weeks ago, fuelling the debate over the fallout of the latest dose of quantitative easing.  

“For banks which are mortgage originators this [QE3] was some of the best news they could possibly have heard,” said Steven Abrahams, mortgage strategist at Deutsche. “They will continue originating loans and selling them into the market at a significant premium.” 

The interest banks pay on mortgage bonds has dropped from 2.36 per cent on September 12, the day before the Fed announced its programme, to as low as 1.65 per cent last week. It edged up to 1.85 per cent on Monday. 

That means the profit, or spread, banks earn from creating new mortgages for homeowners paying around 3.4 per cent and selling the loans into the secondary market has risen to around 1.6 per cent. That is higher than the 1.44 per cent spread they pocketed before QE3 and significantly greater than the 0.5 per cent they earned on average in the decade between 2000 and 2010. 

Disclaimer: this is not an investment site. It was just kinda fun pointing that it looks like the one-percenters are doing very, very well.

Wow.