Wells Fargo & Co., the biggest U.S. home lender, will eliminate 2,300 jobs in mortgage production because demand for refinancings has slumped and probably will drop more as interest rates rise.
Other smaller cuts were made in the past few weeks around the country, said people with knowledge of the matter, who asked for anonymity because the changes haven't been publicly disclosed. The reductions would equal about 20 percent of the firm's 11,406 mortgage loan officers employed as of March 31.
Wells Fargo has said mortgage lending will slow for the rest of this year as higher interest rates make refinancing less attractive. Those loans, which made up 70 percent of the mortgage market during the first half, slid to about 50 percent of applications recently and could fall further in coming months, Franklin Codel, head of mortgage production for the San Francisco-based bank, said in a memo to staff Wednesday.
"We've had to recalibrate our business to meet customers' needs -- and to ensure we're operating as efficiently and effectively as possible," Codel wrote. "Unfortunately, displacements within our team are necessary."
Quarterly mortgage originations will drop to less than $100 billion in the third quarter, spurring the lender to adjust the size of its staff, chief financial officer Timothy Sloan said during the bank's second-quarter earnings conference call. The company made $112 billion in mortgages in the three months ended June 30.
Wells Fargo was the largest employer among U.S. banks at midyear with about 274,000 people. The workers whose positions are being cut received 60 days' notice Wednesday and the firm is seeking to retain as many as possible by placing them in other jobs, said Jennifer A. Temple, a company spokeswoman.
Mortgages typically are divided into those for refinancing existing loans and for home purchases. While refinancings are mainly tied to the level of interest rates, purchase mortgages are tied to home-sale activity.
Wells Fargo accounted for almost 1 in 3 U.S. home loans last year, according to Inside Mortgage Finance, a trade publication.