The Blubber

1.9% of multifamily properties financed with Commercial Real Estate Collateralized Loan Obligations didn't earn enough rent to cover their debts, per Trepp.

Recently, Due to the high housing prices, even banks are losing money on every mortgage they finance. On average, every mortgage that banks originated in 2022 costs the banks $301.

A recent MBA report shared how the new losses represented a 113% decrease from how much a bank made last year. A year before its $301 loss, the bank's average income per mortgage was $2,339.

This is the first time that banks have started to lose on home loan financing since 2008. CMB, MBA's VP of Industry Analysis, Marina Walsh, gave a statement on how the situation has changed.

Walsh: “The stellar profits of the previous two years dissipated because of the confluence of declining volume, lower revenues, and higher costs per loan.”

Walsh also described the drop in purchase and refinance volume, saying that this was due to a combination of mortgage rate increases and low inventory, along with how expensive the market was.

Walsh: “Production revenues declined in 2022, but the bigger story was that production expenses ballooned to a study high of $10,624 per loan. Companies could not adjust their capacity fast enough."

Elon Musk has recently commented on the commercial real estate debt market, saying that it was "by far the most serious looming issue." He also shared how the Feds could potentially affect the entire value of the stock market.

Read more: https://unusualwhales.com/news/housing-unaffordability-is-causing-banks-to-lose-money