Wells Fargo is downsizing its mortgage business

Wells Fargo is retreating from the mortgage business, where it's been a longtime industry leader, the bank said earlier this week.

Why it matters: High mortgage rates have crushed demand for loans, and the biggest home lenders saw business drop by eye-popping percentages last year.

State of play: Wells said it would focus on providing mortgages to existing customers and would continue its efforts around increasing lending to Black and Hispanic homebuyers.

• "Mortgage is an important relationship product," said Kleber Santos, CEO of Consumer Lending, in a statement. “We are making the decision to continue to reduce risk in the mortgage business by reducing its size and narrowing its focus.”
• The bank is shrinking its mortgage servicing portfolio, and completely walking away from "correspondent lending," where it buys loans from smaller lenders.

The big picture: Banks have been pulling back from the mortgage business for a while. A majority of home loans now originate at nonbank lenders like Rocket Mortgage and LoanDepot.com.

• In 2010, nonbanks originated just 10% of mortgages. By 2022 these companies had 65% of the business, according to data from Inside Mortgage Finance.
• As of the third quarter of 2022, United Wholesale Mortgage, a Michigan-based public company that works directly with mortgage brokers, became the biggest mortgage lender in the country, per Inside Mortgage Finance.
• Fun fact: UWM's CEO, Mat Ishbia, agreed to buy a majority stake in the Phoenix Suns last year.