Wells Just Reported The Worst Mortgage Number Since The Financial Crisis

Tyler Durden's picture

When we reported Wells Fargo's Q4 earnings back in January, we drew readers' attention to one specific line of business, the one we dubbed the bank's "bread and butter", namely mortgage lending, and which as we then reported was "the biggest alarm" because "as a result of rising rates, Wells' residential mortgage applications and pipelines both tumbled, specifically in Q4 Wells' mortgage applications plunged by $25bn from the prior quarter to $75bn, while the mortgage origination pipeline plunged by nearly half to just $30 billion, and just shy of all time lows recorded in late 2013 and 2014."

Fast forward one quarter when what was already a troubling situation, just got as bad as it has been since the financial crisis for America's largest mortgage lender, because buried deep in its presentation accompanying otherwise unremarkable Q1 results (EPS small beat, revenue small miss), Wells just reported that its 'bread and butter' is virtually gone, and in Q1 the amount of all-important Mortgage Applications has tumbled by a whopping 23% to just $59 billion, below the lows hit in early 2014, and at fresh lows since the financial crisis.

And while Wells' application pipline was not quite as dire, it too was just shy of fresh post crisis lows at only $28 billion, in line with the lowest numbers reported this decade. 

The lagging mortgage originations number was nearly as bad, plunging 39% sequentially from $72 billion to only $44 billion, "due to higher rates and seasonality." Since this number lags the mortgage applications, we expect it to post fresh post-crisis lows in the coming quarter.

What these number disturbingly reveal, is that the average US consumer can not afford to take out mortgages at a time when rates rise by as little as 1% or so, which is where they peaked in the first quarter. It also means that if the Fed is truly intent in engineering a parallel shift in the curve of 2-3%, the US can kiss its domestic housing market goodbye.

Source: Wells Fargo

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abyssinian's picture

Come on now, Americans have so many jobs and so much cash, they don't need mortgages, everyone is paying with cash... Bullish

ThisIsMadness's picture

All the foriegn investors have been pouring cash into the Dallas area. 

Shitonya Serfs's picture

Could be that people don't trust Wells anymore...did they even consider that?

pelican's picture

LOL... they have fucked the economy up so badly. I have a home in area which died under 2008. No one in the area pays their mortgage anymore. The banks have even given up trying to foreclose.

Meanwhile if you travel further north toward NYC the same home sells for 800k. A small home built in the 50's.

The US has dumped all that cash into the banking system jacking up the prices to unreasonable prices.

darteaus's picture

All that money kept the Brown Clown from failing.  To do otherwise would have been RAY-SYS! 

Houses Depreciate's picture

Problem with that idea is they're not selling at $800k.


Remember..... I can ask $50k for my run down ten year old Honda Civic but where is the buyer at that price?


So it is with rapidly depreciating assets like houses.

giovanni_f's picture

"and the lowest since the financial crisis." But still higher than the low of the crisis. This means the trend is up --> buy with both hands.

gmak's picture

Funny how Uncle Warren was able to get rid of a bunch of shares before this announcement. The guy must be psychic.

NugginFuts's picture

"Oracle of Omaha" indeed....

Watch him bail out of Apple next. For no reason, really.... just cause.... wink wink

SoDamnMad's picture

No No  Warren bailed out of United Airlines just before the CEOs first response to the passenger beating. 

Games Without Frontiers's picture

Not quite as good as when he correctly invested in all the banks that would be bailed out with TARP funds. He was on fire. He's such a good guesser.

NugginFuts's picture

It's called "investing"...... in politicians.

2_legs_bahhhhhd's picture

59-52 in a few weeks, next support at 50. Uncy warren has crystal balls.

Ban KKiller's picture

Wells Fargo exposed, again, as continuing criminal enterprise. Ha ha ha ha...we're still living in two houses free because of bank greed, they have no chain of title. Love being dead beat as the banks have screwed themselves due to....greed and shoddy paperwork, aka, forgery and fraud.

JRobby's picture

Good for you! Use their weapons of greed against them!

Everyone likes to blame Countrywide but Wells was right in there toe to toe on every single product, every single day before the crash. Then they try to act like they weren't doing it.


Sky flyer's picture

A couple more bad news headlines like this and we'll have the markets green by opening bell. Bullish.

element115's picture

KKKloser - you are part of the problem, it takes two to tango. Banks might be greedy but losers like you are the straw that stirs the drink.

It makes me happy to think that, deep down, you wait for that knock on the door, or that phone call you think is coming each time you see a number you don't recognize, knowing that someday you will have your ass thrown out in the street.

Games Without Frontiers's picture

But I thought crony capitalist extraordinaire Uncle Warren was just doing some "technical selling". I wonder if the SEC will look into the trade......oh wait, that would just be if I did it.

Sonny Brakes's picture

In my books, the less an economy needs to borrow the better. Collectively, who do you imagine has to pay the cost of accumulating interest charges? It has to be embedded in everything as a cost of doing business.

On a side note. The same banks that finance mortgages are also financing the robotics that will eventually displace working people. The very people whose wages are currently being counted on to finance mortgages.

Money_for_Nothing's picture

Funny money. This is about separating people from their property. I would wait for a friend to come back before I go on an Elon Musk trip to Mars.

jmack's picture

Buffet insider trading?    I am sure none of his stock sales has anything to do with this information....

blindfaith's picture



Warren Buffett should be tried for trading on insider information since he sold 7 million shares prior to the announcement.

JB Say's picture

So disturbingly. Bigly disturbingly.

Money_for_Nothing's picture

Funny that Berkshire Hathaway bought Heinz just after John Kerry got appointed Secretary of State. Almost as if that was one of the requirements.I think Buffet and Obama may have the same boss.

darteaus's picture

Of course Mortgage Applications are down; interest rates are up.

Fed-up with being Sick and Tired's picture

This is true, coupled with other way more important realities:

1.  REAL WAGES are at secular lows.

2.  WAY too few Millenials are making any money, burdened with College Debt and thus have no money at all.

3.  Leveraging a home now is not workable.    I recall that my first home cost me less than $115, and yet I still had the 20% down and with my small income stream at the time, I could STILL afford to pay PITI (Princ, int, taxes, ins.).

That was within the standards at the time, 28%/32%  (do you guys recall those days??).

2_legs_bahhhhhd's picture

Yes, and my mortgage was at 14.25, then 11.5, then 6.5. We paid it off in 14 years keeping the original payments and two lump sum payments on renewal. The exact opposite of what sheep do today. No wonder the banks make so much fucking money.

hangemhigh77's picture

Was Uncle Warren playing a ukelele and eating an ice cream cone when he committed fraud and theft? Let's ask his right hand man Charlie Munger as soon as he removes his tongue from Uncle Warren's bung hole.

401K of Dooom's picture

Ha ha ha ha ha ha ha ha, I am sooooo happy that I took out my mortgage last year before this crap started.  I can survive on a mortgage rate of 3.75% that is fixed and 30 years.  Millenials gonna cry!

Houses Depreciate's picture

You borrowed for 30 years for a rapidly depreciating house?


LOL you dumb fuck.

wholy1's picture

The "Trump bump" is ending?

hangemhigh77's picture

I don't need no stinking house.

longtimelurkee's picture

I am an agent in fly over country. Luckily our small town has been able keep what factory jobs we have and add some tech jobs. Our inventory is down 50% for the last 3 months compared to the last 3 years for the same months. All I can conclude is everyone who wants a home has one, and those that don't can't qualify for a loan. What is even more interesting is that the homes that are on the market are having to drop their price to attract buyers... I think maybe the music has stopped and there are no more chairs.

MAAAHM's picture

That's great news! I never believed anyone REALLY wanted a TinyHouse

business as stusual's picture

You are making several assumptions not based in fact.

1. The dollar is worth something.

2. The value of the real estate.

3. The financial health of the bank.

4. You financial position is strong enough to withstand having the note called in by the bank.

You may not be in as good a position as you think.


buzzsaw99's picture

the refi gravy train runs off the rails when rates go up. banks rely heavily on mortgage origination and servicing fees. this among other reasons is why treasury rates will keep going down.

mcl2177's picture

Banks have been shedding refi departments for years. There is now years of people who have purchased properties that will never have the ability to refinance. This business is in for hard times for a very long time.

orangegeek's picture

2-10's are still positive, but no one is buying homes at these levels except the chi-coms (fleeing from the pending chi-collapse) and they are buying in cash.


nice to see the banksters are suffering.


would be nice to see data that goes back to 2006 Tylers.

Houses Depreciate's picture



The chi-coms are using borrowed money.

TheABaum's picture

People living with parents, saddled with a pile of debt, (who use Uber because they can't even buy a car) incurred for their utterly useless Batchelor of Snowflake degree in Femynist Studies, now getting part time experience with manufacturing 100% vegan half caf soy lattes with fair trade coffe and vanilla, hooking up or jacking off to porn instead of getting married and forming families don't want or need a house.

Don't worry, NIRP will stimulate maturity, though.


Consuelo's picture



"And while Wells' application pipline was not quite as dire"...



 The only reason WF's application pipeline is 'not quite as dire', is because the FB/GOOG/AAPL/NFLX/MFST, etc. '$ad-revenue' economy in the Bay Area is saving it's $Bacon from going Tits up...  

If you think construction projects stopping mid-hammer-whack was bad in '08/'09/'10, you'd better hope this massive bubble in tech never sees the business end of a pin.

ANiceDepolorable's picture

Housing prices are just too high, which in turn makes property taxes unaffordable regardless of the interest rate. 

skunzie's picture

Might it have anything to do with their (Wells Fargo's) illegally signing people up for accounts they had no idea about?  Perhaps people buying houses do not want anything to do with this criminal enterprise and are going to other mortgage lenders instead.  What do their numbers look like?

innertrader's picture

HOW MUCH did the negative "WELLS" news affect their business?



AgLand's picture

Domestic housing will not die.  Just more people will become renters...

Houses Depreciate's picture

Prices will just continue falling.