Wells Fargo Expects Mortgage Banking Income to Drop 50% -- Is it Time to Buy or Sell the Stock?
At a recent conference, Wells Fargo (NYSE: WFC) CFO Mike Santomassimo told investors to expect mortgage banking income to drop roughly 50% in the second quarter of this year compared to the first quarter. The news is not super surprising considering how much mortgage activity has fallen off due to the rapidly rising interest rate environment, but it's still concerning because Wells Fargo is a large mortgage lender.
Given this news and considering everything else happening in the market right now, is it time to buy or sell Wells Fargo? Let's take a look.
It's not just Wells Fargo. Mortgage activity has plummeted across the industry due to soaring mortgage rates, which have recently started to hit 6% and higher. The Mortgage Banker's Association reported recently that total application volume last week fell close to 53% from the same week in 2021. Overall, mortgage banking income made up about 4% of Wells Fargo's total revenue in the first quarter of this year and close to 12% of total revenue in 2021.
Source Fool.com
