Wednesday, May 28, 2014

Wells Fargo CFO: Spring housing market not living up to expectations

Wells Fargo is seeing higher demand for home loans in the second quarter of this year compared with the first quarter, but the appetite for mortgages appears to be falling short of expectations for the traditionally busy spring homebuying season, Chief Financial Officer John Shrewsberry said at a conference in New York on Wednesday.

The lender's mortgage "pipeline" -- loans that are in the works but have not yet been closed -- is up from the first quarter "but probably not as strong as we might have imagined it being given that this is the beginning of the so-called summer selling season, or spring selling season, when people tend to sell their homes," Shrewsberry said.

Despite the lower-than-expected demand, Shrewsberry described Wells Fargo's mortgage business as "still good."

"It's still registering appropriate profitability. But we might have imagined that there would be been more of it a quarter ago," he said.

Wells Fargo, like other mortgage lenders, is looking for a pickup in mortgage activity. Compared with a year ago, lenders nationwide are coping with lower demand for mortgages, largely as a result of less desire from borrowers to refinance since mortgage rates began rising last year.

In a report last month, the Mortgage Bankers Association said applications for mortgages to purchase homes are about 16 percent below year-ago levels and applications to refinance are about 70 percent below where they were a year ago.

Wells Fargo and other banks, including Charlotte-based Bank of America, have slashed thousands of employees in their mortgage units as fewer borrowers refinance.

Wells Fargo, the largest U.S. mortgage lender, is often seen as a bellwether for the housing market. Last month, during a first-quarter earnings conference call with analysts, executives at the San Francisco bank said they were optimistic about prospects for the spring housing market.

During the first quarter, Wells Fargo reported that it originated $36 billion in mortgages, down from $109 billion the same period a year earlier.


Anonymous said...

Wells is the best bank out there. Period.

Anonymous said...

You've obviously never worked for them.