Wells Fargo, one of America’s largest banks, dropped to about 18,000 loans in progress, a dramatic change from one year ago with the mortgage pipeline declining by more than 75%.
While lending was expected to slow given higher interest rates and coming down off of a red hot market during Covid, the drop has fueled speculation that there will be dramatic cuts in its lending units.
Mortgage rates have more than doubled on a 30-year loan year over year, historically the most popular mortgage for American homebuyers.
Today, the Fed did not show signs of any relief, indicating even more rate hikes which sent the Dow Jones on a swing downward of 750 points from its inter-day high.
Non Banks that rely on refinancing are being hit the hardest, but banks are not far behind. Wells Fargo relies heavily on mortgage revenues in comparison to its largest competitors. In October, a spokesperson for Wells Fargo indicated that the present market may lead to job cuts.
The statement read, “The changes we’ve recently made are the result of the broader rate environment and consistent with the response of other lenders in the industry. We regularly review and adjust staffing levels to align with market conditions and the needs of our businesses.”
Wells Fargo has done quite a bit of work to help its balance sheet overall, but the bank stock is still down overall in 2022.
The number of mortgage brokers at the bank could fall by as much as 50% year over year by the end of 2022.