It’s currently that week of the fiscal quarter when the country’s biggest banks release their earnings reports — J.P. Morgan Chase, Wells Fargo, and Citibank all report on Friday. A lot of eyes will be focused on those banks’ lending businesses as they try to make the transition from the low interest rates of the recent past to today’s higher rates. Unsurprisingly, higher rates are hitting banks’ loan businesses.

In fact, as interest rates have risen over the last 18 months, the market for mortgages has pretty much collapsed. 

“It’s just simply unaffordable to get a loan,” said Susan Wachter, a professor of real estate and finance at the Wharton School of the University of Pennsylvania. 

She points out the collapse has already affected banks’ balance sheets. 

“For many banks, this has been historically a profit center,” she said. “But it’s not a profit center any longer. This is a loss maker.”

Wachter said banks have reacted by cutting staff. 

But the collapse is even more painful at non-bank lenders, which actually issue the majority of mortgages. 

“They’re all fighting over a smaller pie,” said Ben Elliott, a consumer financials analyst for Bloomberg Intelligence. “So what you’ve seen in the industry is relatively large-scale layoffs.”

High interest rates are affecting commercial real estate lending, too. 

Merrill J. Reynolds, a banking industry consultant based in Texas, said banks he works with are seeing less demand and borrowers are having a harder time making payments. 

“We’re starting to see delinquencies starting to pick up,” Reynolds said. “And I think they’re going to continue to grow over the next six, 12, 18 months.”

The thing is, while mortgages and commercial real estate loans are hurting, banks are actually lending more money overall right now. 

Loan balances were up 4.5% at the end of June from last year according to the FDIC.

And financial risk consultant Mayra Rodriguez Valladares said that’s good news for the biggest banks. 

“All those banks are fine, more than fine, because they have not only the loans of every kind, but they also have asset management, they also have investment banking,” she said.

Rodriguez Valladares said this is a lesson in the importance of diversification, as opposed to concentrating in just one particular area — which she calls a major no-no.