A significant portion of customers in Wells Fargo & Co's (WFC.N) $1.9 trillion mortgage servicing portfolio remain strong candidates for refinancings, the head of the bank's home lending unit said on Thursday.
More than 40 percent of customers in the portfolio have home loans with interest rates above 4 percent, strong credit scores and equity in their home, Mike Heid said at an investor conference.
"The opportunity is there," Heid said, reiterating previous statements by the bank that a U.S. mortgage refinancing boom spurred by low rates could last several more quarters.
The fourth-largest U.S. bank by assets uses the portfolio data to gauge the potential for future refinancings, but Heid cautioned that not everyone will choose to refinance or use Wells Fargo for their new loan.
Mortgage refinancings have helped boost earnings at Wells and other U.S. banks in recent quarters. Wells, the largest U.S. mortgage lender, had $97 billion in unclosed home loans entering the fourth quarter, which Heid called a strong starting point.
Pointing to stabilizing home prices and home sales, Heid said the "housing market is definitely showing signs of recovery." Earlier this month, JPMorgan Chase & Co (JPM.N) CEO Jamie Dimon said the housing market had "turned the corner."
Asked about the impact of Hurricane Sandy on the bank's mortgage business, Heid said much of the credit risk in the bank's portfolio would be passed onto investors who own the loans, such as mortgage finance companies Fannie Mae FNMA.OB and Freddie Mac FMCC.OB. He encouraged customers who will have problems making payments to contact the bank. (Reporting By Rick Rothacker in Charlotte, North Carolina; Editing by Gerald E. McCormick and Leslie Gevirtz)