Wells Fargo, the largest producer of mortgages in the United States, released its most recent earnings statement. As the country’s largest originator of residential mortgages, it can be a useful barometer for the current state of the housing market.
Image courtesy of Wells Fargo
The graph above outlines the previous five quarters of residential mortgage production and servicing for Wells Fargo. The two most important take-aways from this graph can be found in the fourth quarter of last year.
The bad news: mortgage originations were down $30 billion from the third quarter in 2013 and down $75 billion from the fourth quarter of 2012. Some of the loss from quarter to quarter of last year can be attributed to seasonal adjustments (i.e. fewer homes are sold every winter, every year). Also, some of the decline from year over year can be attributed to Wells Fargo releasing over 1,000 full-time employees in their residential mortgage department.
The good news: the number of mortgage originations on new purchases accounted for a full two-thirds of Wells Fargo residential mortgage production. This is especially good news for real estate agents, real estate brokers, and real estate investors looking for more buyers. If more unique mortgages are produced, one can infer that there are more unique homeowners. With more unique homeowners comes the prospect of more prospects.
In the upcoming year, keep a close eye on not only the dollar amount created from mortgage originations, but keep an especially close eye on the number of mortgages stemming from new purchases. This could be an early signal for a successful 2014.
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