BofA Expects Less Damage From Weaker Mortgage Market
(Corrects to show CFO spoke in separate conference calls starting from the second paragraph.)
Bank of America Corp. expects to suffer less damage than its biggest rivals as higher interest rates drive down mortgage lending this year.
“While clearly rates can have an impact, I’m not sure we’ve seen quite the magnitude of the impact some others discussed,” Chief Financial Officer Bruce Thompson told reporters today after the company reported quarterly results.
Wells Fargo & Co. (WFC), the biggest U.S. home lender, and JPMorgan Chase & Co. (JPM), ranked second, have said mortgage lending will slide in the second half of this year as refinancings wane, and JPMorgan Chief Executive Officer Jamie Dimon warned the effect could be dramatic. Bank of America’s pending mortgages dropped 5 percent at the end of the second quarter from three months earlier, Thompson said.
The bank has sought to rebuild market share into the “high single digits” and continued to add mortgage loan officers in branches and more people in sales and fulfillment, Thompson told investors during a conference call. First-time home buyers may offset some of the decline in refinancings if higher interest rates are driven by an improving economy, he said.
“To the extent that the economy’s performing well, people have jobs and home prices are going up, you will tend to see people looking to purchase a home for the first time and that benefits us,” Thompson told reporters. If rates rise, “you tend to see less refinancing activity and so those revenues that come out of refinancing are less. And the net of that is always very difficult to predict.”
Second-quarter profit rose 63 percent company-wide, the Charlotte, North Carolina-based company reported today. Bank of America ranks second by assets among U.S. lenders, and had been the largest mortgage lender after buying Countrywide Financial Corp. as the 2008 financial crisis gathered steam. The bank backed away from the market as it dealt with claims tied to faulty home loans and mortgages.