Wells Fargo’s Mortgage Origination Outlook as Rates Rise

April 12th, 2011 by Trefis Team
-6.91%
Downside
60.60
Market
56.41
Trefis
WFC: Wells Fargo logo
WFC
Wells Fargo

The recent increase in 30 year fixed home mortgage rates in the U.S. seems to have created ripples in the mortgage industry. Mortgage applications decreased 2% in the week ended April 1, according to the Mortgage Bankers Association’s index. In another development, mortgage lending giant Wells Fargo (NYSE:WFC) reportedly eliminated 1,900 home-lending jobs, mostly those created to deal with last year’s mini-boom in refinancings. [1] [2]

Wells Fargo’s competitors include banks such as Bank of America (NYSE:BAC), Goldman Sachs (NYSE:GS), JPMorgan Chase (NYSE:JPM), Citigroup (NYSE:C) and UBS (NYSE:UBS).

Relevant Articles
  1. Wells Fargo Stock Delivered More Than 50% Return Over The Last Twelve Months, What’s Next?
  2. Is Wells Fargo Stock Fairly Priced?
  3. Where Is Wells Fargo Stock Headed?
  4. Wells Fargo Stock Is Trading Below Its Fair Value
  5. What To Expect From Wells Fargo Stock In Q4?
  6. Is Wells Fargo Stock Fairly Priced?

When mortgage rates hit a record low in 2010, it led to a mini-boom in mortgage refinancing that lifted mortgage giant Wells Fargo. But as rates slowly creep towards 5%, there could be a significant drop in Wells Fargo’s home mortgage originations (which include refinancing as well as mortgages on new and existing homes)

We maintain a $33.81 price estimate for Wells Fargo stock, roughly 10% above market price.

See our complete analysis of Wells Fargo stock here.

Notes:
  1. Home lenders shed workers as mortgage rates climb, Los Angeles Times [↩]
  2. Mortgage Rates on Fixed 30-Year U.S. Loans Increase to 4.87%, Bloomberg [↩]