Wells Fargo, one of the largest mortgage lenders in the country, is stepping back from the mortgage market, reports Forbes. The lender is reportedly not getting out entirely, but it plans to make drastic changes to its strategy. In the past, Wells Fargo was focused on getting as many mortgage customers as they possibly could. Now, CEO Charlie Scharf is going to focus on lending to existing customers, as well as improving their service offer for minorities.
A major driver for the change has been the Fed’s interest rate policy. While it’s seen the net interest margin increase substantially, the demand for mortgages has fallen through the floor. 30-year fixed mortgages have gone from interest rates below 3% to hovering around 7%.
That means the average monthly mortgage has risen by hundreds of dollars a month, putting dream homes out of the reach for many potential buyers.
Wells Fargo is obviously concerned about the longer-term ramifications for this change in interest rate policy.
The company has had to deal with its fair share of issues, even after the 2008 financial crisis. This fundamentally changed the way lending operates in the U.S., and as one of the nation's largest housing lenders, they’ve felt the full force of the regulation changes.
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