The 100 banks with the largest portfolios of mortgages and mortgage securities increased them by about $51 billion, or 15%, last year, reaching about $391 billion.

Home loans accounted for about $31 billion of the gain, and mortgage-backed securities for most of the remainder, rising by about $14 billion.

For all banks, the gain was similar. Portfolio holdings climbed by $83 billion, or 12%. Home loans accounted for $53 billion of the increase and mortgage-backed securities another $20 billion.

Lack of Loan Demand Cited

Ron Mandle, a senior research analyst at Sanford C. Bernstein & Co., New York, attributed the expansion to "a lack of loan demand elsewhere and a greater willingness on the part of banks to hold mortgages for their own portfolios." He said this applied particularly to 15-year loans, which are considered less risky because of the shorter durations involved.

He said demand for mortgage securities could show a slackening this year. "Credit-card demand is strong, and so is demand for commercial and industrial loans, so you may see less demand for mortgages," he said.

Tom O'Donnell, an analyst at Smith Barney, New York, also said the popularity of 15-year fixed loans helped swell banks' portfolios. "Obviously, 15 years is better for rate risk than 30 years," he said. "Those loans also improve credit quality, so credit risk is lower."

He added, however, that consumer demand for the 15-year term has disappeared. Mr. O'Donnell observed that the surge in demand for adjustable-rate mortgages provided banks an opportunity for further portfolio expansion, but at a price. "Some of the credits they are issuing now may be bad credits, and two years down the line they could be a problem," he said.

The top two banks in total mortgage investments - Bank of America, San Francisco, and Chemical Bank, New York -- showed little change in the size of their portfolios. No. 1 B of A had a decline of 4.3%, mostly because. of a runoff of almost $2 billion in whole loans.

Chemical showed a gain of almost 3%, with MBS holdings and whole loans both contributing.

Both banks have shown a renewed interest in residential lending and have beefed up their mortgage capabilities in recent months.

Among the top 10 holders, Chase Manhattan Bank, New York, showed the biggest increase in its portfolio, almost 60%. The bulk of it came from a $4.2 billion increase in home loans. Citibank, New York, remained in the top 10 but continued to shrink its holdings, showing a drop of about 7.7%. Citibank has the smallest percentage of its total assets in mortgage securities, 4.4%, of any of the top 100. Industrywide, the average is about 22%.


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