The mortgage business for this banking giant is struggling right now. Mortgage origination is one of the most cyclical businesses out there. When times are good, the companies do great. When times are bad, they tend to be really bad. This was the case even with the economic disruptions caused by the COVID-19 pandemic. Businesses in this sector need to be ready for that cyclicality or they need to consider not participating. Wells Fargo ( WFC 3.25%) recently announced it will drastically shrink its mortgage banking business. Why is Wells throwing in the towel? Did the cyclicality become too much? Image source: Getty Images. Mortgage banking is a feast-and-famine business The past year has been downright awful for the mortgage banking business. During 2020 and 2021, mortgage bankers feasted. The Federal Reserve cut the prime lending rate down to the floor to help stimulate the economy in order to offset the economic drag of the COVID-19 pandemic. This kicked off a massive wave of refinancing activity, as borrowers rushed to take advantage of the low rates. Mortgage banking volume ballooned in response. You can see the spike in the chart below. Please note that the chart does not contain […]
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
K&X Design and Investment Technology, LLC
Invest The Invisible Impact
