Wells Fargo's Mortgage Origination Outlook as Rates Rise

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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 ( WFC ) reportedly eliminated 1,900 home-lending jobs, mostly those created to deal with last year's mini-boom in refinancings.

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

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.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks , US Markets

Referenced Stocks: BAC , C , GS , JPM , WFC

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