Wells Fargo, the largest mortgage lender in the United States, will cut 2,300 jobs in its home loan business because fewer customers are refinancing as interest rates rise, according to an internal memo reviewed by Reuters.
The cuts would represent around 3.3 per cent of the bank’s consumer lending employees, the bank said. Although the bank does not disclose how many of its staff work in home loans specifically, Wells Fargo had over 11,000 mortgage loan officers on its payroll at the end of March.
Mortgage refinancing made up more than 70 per cent of US home lending volume in the first half of this year, but it has fallen to around 50 per cent of lending and could fall further in coming months, Franklin Codel, Wells Fargo’s head of mortgage production, said in the memo.
“We’ve had to recalibrate our business to meet customers’ needs, and to ensure we’re operating as efficiently and effectively as possible. Unfortunately, displacements within our team are necessary,” Codel said.
The bank had expected higher lending rates to cut into its mortgage business. chief financial officer Tim Sloan said on a July 12 conference call with analysts that rising mortgage rates would likely end the bank’s streak of seven consecutive quarters of making more than US$100 billion of home loans.
“We just don’t think that we are going to see US$100 billion of mortgage volume, given the current rates today, in the third quarter,” Sloan said. “We will need to go ahead and make some adjustments.”