SAN FRANCISCO–Wells Fargo is no longer accepting applications for home equity lines of credit “due to lack of visibility on the economy” resulting from the coronavirus pandemic.
The announcement comes even as many analysts have said low mortgage rates mean the one loan category likely to perform well in the months ahead is HELCOC and first mortgages. But for lenders the risk is homeowners tap equity lines as they exhaust other financial options while the equity in their homes shrinks.
"Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity lines of credit (HELOCs) after April 30," the bank said in a statement. "The decision to temporarily suspend the origination of new HELOCs reflects careful consideration of current market conditions and the uncertainty around the timing and scope of the anticipated economic recovery."
Wells Fargo isn’t the first to make such an announcement. The nation’s biggest bank, JPMorgan Chase, said it was also temporarily moving to no longer accept HELOC applications, saying in a statement the move is to “protect both you and the bank.”