Wells Fargo will take a break from offering new home equity lines of credit beginning Friday as credit continues to tighten during the coronavirus pandemic, according to media reports.
The San Francisco-based banking giant joins JPMorgan Chase in backing off the loans known as HELOCs, which allow homeowners to borrow money against the equity in their houses.
“Wells Fargo Home Lending will temporarily stop accepting applications for Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity lines of credit (HELOCs) after April 30,” the company said in a statement shared with The Mortgage Note. “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.”
“Due to the economic uncertainty created by COVID-19, we’re temporarily not accepting applications for new home equity lines of credit (HELOC). This will protect both you and the bank.”
Even though mortgage rates are at all-time lows, borrower are having a harder and harder time accessing credit as the coronavirus decimates the American economy. More than 30 million workers have applied for unemployment benefits since the pandemic took hold.
Redfin announced Wednesday that its Mortgage Credit Availability Index dropped 16 percent in March and is at its lowest level in five years. The index measures how easy it is to get a home loan.
Chase previously announced that it was no longer accepting HELOC applications, “We’ve decided to make some temporary product changes because of economic uncertainty created by COVID-19. This change protects both you and the bank. “
Chase also said it would continue to review HELOC previously submitted and “we’ll contact you with a decision.”