Bank of America to lay off thousands in mortgage business
Layoffs at Bank of America’s mortgage business will amount to about 2,100 positions, a source told Reuters on Monday, in response to weak refinancing activity.
The downsizing reflects the second-largest US bank’s “ongoing efforts to streamline our facilities and align our cost structure with market realities,” Bank of America said in a statement.
Bank of America workers in states such as Ohio, Florida and Virginia received notice of planned layoffs in late August, the Cleveland Plain Dealer reported. About 1,000 of the workers to be laid off are based in the Cleveland, Ohio area, according to local filings. A person familiar with the matter told Reuters on Monday that about 2,100 jobs in total would be eliminated.
Large US banks including Bank of America, JPMorgan Chase and Wells Fargo have said they expect a decline in refinancing volume, driven by higher interest rates, to hit revenue in the near term. Applications to refinance mortgages have dropped 63 per cent since a peak in early May, according to the Mortgage Bankers Association refinance index.
Bank of America is the third-largest mortgage lender in the US, with a market share of 5.2 per cent in the second quarter, according to Inside Mortgage Finance, an industry publication. It extended $25.3 billion in home loans in the second quarter, up from $23.9 billion in the first quarter.
Bank of America is not the only US bank to scale down its mortgage business as interest rates rise. Wells Fargo announced 2,300 layoffs in its home loan unit on August 21.
The San Francisco bank will make nearly 30 per cent fewer home loans in the third quarter than in the second quarter because of fewer refinancings, chief financial officer Tim Sloan said on Monday.