Question

How often do banks today hold loans that they make, for example, home mortgage loans under the traditional "originate to hold" model of banking?

		Never, because it is not legal to do so
		Always, because the law required it
		Not often, because banks prefer to sell off the loans
		Most of the time.

How did banks earn profits under the traditional "originate to hold" model of banking?

		Securitization of home loans
		Making loans and earning interest that was higher than the interest paid on deposits
		Charging fees to their customers for services like overdrafts and financial advice
		Holding liabilities that were always a little larger than their assets.

Answer 1

Under traditional "originate to hold" model of banking the banks used to make loans to the customers and held it until borrower paid them in full. Their profit came from the making the loans and earning interest that was higher than the interest paid on deposits.

In earlier times the reason to hold the loan till maturity was that it was difficult to sell it to someone else. Nowadays, it has become a lot easier to sell the loans.

Question 1. Answer

Most of the time. (Since, it was difficult to sell).

Question 2.

Making loans and earning interest that was higher than the interest paid on deposits.

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