As the housing market in the United States cools, Wells Fargo (WFC.US) fires hundreds of employees from its mortgage unit.
Wells Fargo & Co. (WFC.US) said on Thursday that it was letting go of hundreds of workers in its mortgage division. This was the latest round of layoffs in the industry as a whole. Rising interest rates caused the growth of home loans to slow down during the new credit crisis.
As the Federal Reserve keeps raising interest rates to fight inflation, the most recent round of layoffs happens at the same time that mortgage rates are at their highest level in 20 years. Because of the drop in refinancing, some people who wanted to buy a home had to leave the market.
Many businesses regularly look at their staffing levels and make changes to keep up with changing market conditions and operational needs.
The bank has employed thousands of people this year after the most recent round of layoffs. The bank’s competitor, JPMorgan Chase (JPM.US), moved and fired hundreds of people from its home lending group in June, and it has since made more cuts.
Since the financial crisis,
non-bank lenders have dominated the mortgage market and grown quickly. However, they have also been letting people go.
Mike Santomassimo, the chief financial officer of Wells Fargo, told investors in October that he thought rising interest rates would keep the mortgage business “challenging in the short term.” Wells Fargo is the largest home lender among U.S. banks.
For the first nine months of the year, fees at the mortgage division decreased by 70%.
Wells Fargo has decided to forego its long-term plan to dominate the mortgage market in favor of a long-term reduction of its mortgage business. Charlie Scharf, the CEO of Wells Fargo, has been changing the way the bank works for the past three years. He is doing this to save the company from a number of scandals.
After major U.S. banks paused layoffs in the wake of the epidemic starting in mid-2020, Wells Fargo was the first to start them back up, reducing its workforce by 13% while JPMorgan Chase took over as “the U.S. bank with the most people.”
Layoffs to continue in 2023