Wells Fargo & Co, the largest US mortgage lender, said on Thursday that given the economic turmoil fueled by the coronavirus crisis, it would temporarily stop accepting applications for home equity loans.

The suspension will stay in effect until bank executives have a better idea of what the economic rebound would look like, bank spokesperson Tom Goyda disclosed in a statement.

In reaction to the ongoing global health problem, which has threatened to ravage the global economy into deep recession, banks have made steps to improve credit quality.

After April 30 Wells Fargo Home Lending will temporarily stop accepting applications for all new home equity credit lines, Goyda said in an emailed statement.

The option reflects careful consideration of existing market conditions and the doubts surrounding the timing and extent of the expected economic recovery, Goyda pointed out. Banks have withdrawn from housing-linked loans as the pandemic affects home prices and borrowers' credit standing.

JPMorgan Chase said earlier this month it dropped HELOCs and also tightened conditions under which it would offer mortgages, requiring higher FICO scores and larger down payments on new loans.

HELOCs are a way to create a cash hedge for homeowners while capitalizing on Federal Reserve interest-rate cuts by using assets as leverage. During the crisis, banks were more preferred to underwrite HELOCs. JPMorgan indicated recently that consumers could still tap into the equity of their home by refinancing their current mortgage cash out.

Wells Fargo workers who have previously worked on home equity loans will move to help the bank process acquisitions and refinance mortgage loans where applications have increased as a result of lower interest rates, sources with knowledge of the revision in policy, said.

The bank also paused on numerous home loan items earlier this month, including cash out refinance loans, most home equity loans over $250,000 and riskier non-compliant mortgage loans.

Wells Fargo had to retrench from the market, steering away from riskier loans and non-compliant mortgages. HELOCs are riskier items for banks during difficult economic times, and in a bankruptcy the lender who made the primary mortgage is first in line to get paid in a recovery.

Nevertheless, the move would affect customers of Wells Fargo who had hoped to take out a line of credit dependent on the equity they had in their homes. The money may be used for a rainy day fund for people who lost jobs or whose companies were shuttered following the closures due to the current health crisis.