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BUSINESS
New York

Wells Fargo announces layoffs in mortgage unit

David Craig
USA TODAY
  • Country%27s largest mortgage lender to cut 2%2C300 jobs
  • Recent surge in interest rates has put a damper on mortgage refinancings
  • Refinancings%2C 70%25 of applications in the first half%2C are down to 50%25 and will fall more

NEW YORK — Wells Fargo on Wednesday announced a round of layoffs in its mortgage business, saying the recent sharp run-up in interest rates is taking a toll on its refinancing business.

Wells Fargo announced layoffs in its mortgage division.

The USA's largest mortgage lender sent 60-day notices to 2,300 people in its mortgage division across the country. Though the bank doesn't break out figures for that business, its overall consumer lending division now has 70,000 workers.

"The main driver is less refinancing volume than we saw last year and even early this year," says Tom Goyda, a spokesman for Wells Fargo Home Lending. "We needed to respond to better align our team with the market."

Record-low interest rates had driven refinancing up to 70% of all mortgage originations in the first half of 2013, Goyda says, but industry trends suggest that now has dropped to half of overall application volume and will fall even more in coming months.

Continuing that slowdown, on Wednesday the Mortgage Bankers Association said mortgage applications fell 4.6% in the week ended Aug. 16.

The jobs cuts come as Wells Fargo has been turning in a strong performance. On July 12, it reported record quarterly net income of $5.5 billion, up 19% from a year earlier – and its 14th consecutive quarter of growth in diluted earnings per share. At the time, Wells Fargo and other banks were predicting a big decline in mortgage lending the second half of the year.

Wells Fargo stock, which fell 23 cents to $42.36 Wednesday, is up 24% this year, vs. a 15% gain in the Standard & Poor's 500 index.

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