Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why Wells Fargo & Co (WFC) Is Bucking Today’s Downtrend

On a day when most bank stocks are down, investors in Wells Fargo & Co (NYSE:WFC) will be happy to hear that the California-based lender is bucking the trend — at least for the time being. Roughly halfway through the trading session, shares of the nation’s fourth largest bank by assets are up by $0.24, or 0.59%. By comparison, the KBW Bank Index is lower by 0.13%.

Wells Fargo & Co (NYSE:WFC)

The impetus for today’s climb is admittedly hard to pin down, as much of the news coming out of the sector over the last few days would seem to weigh on bank stocks in general and Wells Fargo & Co (NYSE:WFC) more particularly. Yesterday, for example, the Mortgage Banks Association released the results of its latest survey of weekly mortgage applications. According to its estimate, after adjusting for seasonality, mortgage applications decreased last week by 11.5% compared to the week prior. Excluding the seasonal adjustment, they fell by 20% over the same time period.

What’s driving mortgage application volumes down? The answer is higher mortgage rates. According to Freddie Mac’s Primary Mortgage Market Survey, the average rate on a conventional 30-year fixed-rate mortgage shot up this week to 3.91%. That’s the highest rate in over a year, and nearly 60 basis points up from the trough at the end of 2012. This uptick is reducing the incentive of current mortgagees to refinance, as the MBA also reported yesterday that the refinance share of mortgage activity decreased to 68% of total applications down from 71% the previous week.

To get back to Wells Fargo & Co (NYSE:WFC), in turn, anything that happens in the mortgage market is of primary concern to the bank because it underwrites roughly a third of all home loans in the United States. But the flip side of the coin — and this may go a long way toward explaining why Wells Fargo is bucking today’s downtrend — is that any negative impact of higher interest rates on mortgage applications volumes will be at least partially offset by a higher yield on earning assets.

The article Why Wells Fargo Is Bucking Today’s Downtrend originally appeared on and is written by John Maxfield.

John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Wells Fargo. The Motley Fool owns shares of Wells Fargo.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!