SAN FRANCISCO–Two of the nation’s biggest banks are reporting a decline in mortgage volumes as the result of increasing interest rates.
Both Wells Fargo and Charlotte, N.C.-based Bank of America Corp. said moves by the Fed to push up interest rates have led to declines in their respective pipelines of business. Wells Fargo said its applications for home loans dropped 40% to $30 billion at the end of the fourth quarter, compared with the end of Q3. Overall, the bank’s mortgage revenue declined to $6.1 billion, which is the lowest level the bank has seen since 2009. Similarly, Bank of America said its mortgage pipeline is down 43%, due in large part to a decline in refinancing applications.
A recent report by Keefe, Bruyette & Woods suggests that U.S. home loan originations could decline 17% to $1.5 trillion in 2017, according to Bloomberg.