Wells Fargo (WFC) says it is exiting the multitrillion-dollar market for U.S. mortgages due to increasingly onerous regulatory requirements and rising interest rates.
The American lender says it now plans to focus exclusively on home loans for existing bank and wealth management clients, as well as borrowers in minority communities.
Wells Fargo’s move comes as the mortgage market in the U.S. has all but collapsed since the Federal Reserve began raising interest rates last year to lower inflation that is running at a 40-year high in America.
Mortgages remain the biggest debt held by Americans, making up 71% of the $16.5 trillion in total household balances.
Wells Fargo was a leader in U.S. home loans, managing as much as $201.8 billion in volume, according to data from Inside Mortgage Finance.
Wells Fargo is now shifting to generate more revenue from investment banking and credit cards, following other U.S. lenders such as Bank of America (BAC) and JPMorgan Chase (JPM), both of which exited the mortgage market after the 2008 financial crisis.
Wells Fargo’s stock has declined 24% over the last year to trade at $42.36 U.S. per share.
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