Wells Fargo & Co. (WFC) Chief Financial Officer Timothy Sloan told investors Friday that despite a decline in mortgage applications, the pipeline so far remains strong.
Mortgage-interest rates rose significantly late in the second quarter, which discourages homeowners from refinancing mortgages. However, Mr. Sloan said, “We still have a relatively large unclosed [mortgage] pipeline at the end of the quarter.”
Applications for mortgages from borrowers to purchase homes remain strong, Mr. Sloan said during a conference call after the bank reported second quarter earnings. But refinancings of existing mortgage are expected to decline, he said.
J.P. Morgan Chase & Co. (JPM) CFO Marianne Lake said earlier Friday morning that if interest rates remain unchanged or even rise, the refinance market overall could shrink by 40%. Mr. Sloan didn’t take as bleak a view on the business.
“We don’t know for sure where [mortgage origination] volume is going to be,” Mr. Sloan said when asked during the Wells Fargo call about Ms. Lake’s remarks. “We believe it’s going to be lower in this quarter, and one of the things that we learned in the mortgage business it’s probably not a good thing to think six months out or nine months out because there could be so much variability.”
Already, mortgage rates have fallen slightly in early July, he noted.
Mr. Sloan did say that losses from delinquent loans continue to improve broadly, and the reserve for loan losses is expected to continue to decline.