Wells Fargo Still Leading U.S. Mortgage Lender, Despite Reduced Share
Inside Mortgage Finance’s survey of mortgage lenders released Wednesday still showed Wells Fargo & Co. (NYSE:WFC) as the leading originator in the United States despite losing a bit of its market share.
Compared to the first quarter of 2012, when Wells Fargo had a 33.9 percent market share, the lender garnered 32.4 percent in Q2 2012. Wells Fargo’s top competitors, namely JPMorgan Chase & Co. (NYSE:JPM), U.S. Bancorp (NYSE:USB) and Bank of America Corp. (NYSE:BAC), boasted increased market shares in the second quarter.
Despite having a larger market share and having an 18 percent increase in new loans, Bank of America dropped from second to fourth place in the charts. BofA’s mortgage activity has been on a downwards trend since last year, when they had put an end to their correspondent lending practices.
Correspondent lending involves buying mortgages from other, less prominent banks and financial institutions.
According to Inside Mortgage Finance publisher Guy Cecala, it may have been unreasonable to expect Wells Fargo to improve from 30 percent to 40 percent in terms of market share. Even with the slight downtick in activity, Wells Fargo is still well ahead of the competition. Nonetheless, the second quarter saw several other banks widening their presence as mortgage lenders, leading to the drop in market share for Wells Fargo.
Overall, mortgage lending was profitable in the second quarter of this year, thanks to the continuing record-low average mortgage interest rates recorded. These low rates have encouraged homeowners to take advantage of the situation and refinance their mortgages accordingly.