Wells Fargo is making some major waves in the mortgage industry in the first quarter, announcing that they doubled their mortgage originations, building its lead over Bank of America.
According to Bloomberg, Wells Fargo lent more than $100 billion in
mortgages while Bank of America only funded about $89 billion, and $4 billion in home-equity loans. In the quarter prior, the banks were near neck and neck at $50.9 billion for Wells Fargo, and $50 billion for
Bank of America.
It is believed that the doubling of the mortgage originations is a direct cause of Wells Fargo’s acquisition of Wachovia Corp in the fourth quarter of last year.
Bank of America however remains as the biggest servicer of home loans, but may soon lose that position in the industry if Wells Fargo continues this strong trend of growth which is expected to continue in the second quarter. Back in July last year with the acquisition of Countrywide, Bank of America moved from the fifth biggest mortgage originator and sixth largest services to number one in both categories.
Both banks expanded their mortgage units after their acquisitions last year which helped stabilize the banking system. In addition, the Federal Reserve began buying mortgage bonds and said last month, that they may purchase $750 billion in securities from Fannie, Freddie and Ginnie Mae.
Wells Fargo also announced that in response to this, they had to hire over 5,000 people to handle the increased workload. According to Chief Financial Officer,
Howard Atkins, of the San Francisco based bank, the bank added employees all over the country to handle the mortgage applications. About 20 – 25% of the mortgages written by Wells Fargo in the first quarter were for new homes, the remaining were refinancing.
According to Inside Mortgage Finance, overall home lending across the nation surged 60% in the first quarter to $407 billion.
Home average mortgage rate for a 30-year fixed dropped to 4.82 percent on April 16 from 4.87 percent a week prior as reported by Freddie Mac. This the first time in history that rates dropped below 5 percent, in almost 60 years.
About Wells Fargo
Wells Fargo is one of the oldest financial institutions in the United States today, and one of the strongest. As a diversified financial services company with worldwide operations, they are considered to be the fourth largest bank by assets, and second largest by market cap. They are the only bank in the United States to be rated AAA by the rating firm, Standard & Poors.
About Bank of America
Bank of America is considered the largest financial services company in the world by assets and second largest by deposits. They are the number one underwriters of global high-yield debt, the third largest underwriter of global equity and the ninth largest adviser on global mergers and acquisitions. They serve clients in over 150 countries.