Wells Fargo (WFC) - Get Report said it would no longer be accepting applications for home equity lines of credit, or HELOCs, due to lack of visibility on the economy and housing market prompted by the coronavirus pandemic.
"Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity lines of credit (HELOCs) after April 30," the bank said in a statement provided to media. "The decision to temporarily suspend the origination of new HELOCs reflects careful consideration of current market conditions and the uncertainty around the timing and scope of the anticipated economic recovery."
The announcement follows a similar move by JPMorgan Chase (JPM) - Get Report earlier this week, in which the bank said it was temporarily not accepting applications to protect “both you and the bank,” according to a statement posted on the bank’s website.
It also comes as banks in particular continue to navigate the uncharted waters of the coronavirus pandemic. While reminiscent of the 2008 financial crisis, which prompted banks to pull back lending amid a massive seizure in global credit markets, the current crisis has not yet prompted concern about liquidity, either from banks giving it out or customers paying it back.
What is of concern for banks and market-watchers this time around is the depth and scope of the economic shutdown, particularly in the U.S. As of the end of April, more than 30 million people had filed for unemployment insurance benefits across the country as the economy back-pedaled by more than 4% in the first quarter.
Shares of Wells Fargo were down 3.27% at $28.06 in trading on Friday.