Wells Fargo said it would lay off more than 600 employees in its home mortgage business across. The reason: Fewer people are buying homes.
The cuts will affect workers nationwide, including states like California, Florida, North Carolina, and Colorado, according to Bloomberg. The Orlando Sentinel reported that 137 of those employees work in the central Florida city.
In a statement, the bank said: “After carefully evaluating market conditions and consumer needs, we are reducing to better align with current volumes.”
Wells Fargo is also seeing the end of a refinancing boom, as mortgage interest rates rise, according to Bloomberg. Mortgage fees the bank earned dropped to the lowest in more than five years in the second quarter.
The news comes shortly after the National Association of Realtors reported that existing home sales dropped by 0.7 percent in July compared to the same period in 2017. Combined with a decline in June, sales are now 1.5 percent lower than they were a year ago, and have fallen for five straight months on a year over year basis.
One of the reasons for the slowdown could be attributed to steadily rising home prices and may eventually lead to a leveling-off in pricing, experts have said.
In the Northeast, home sales have dipped by 8.3 percent, the most of any region in the country. Prices in the Northeast were also up 6.8 percent over the same time last year. The median house now costs $308,700 there.
Wells’ mortgage business staff cuts come amid a slight overall rise in the number of housing start foreclosures last month across the country. In some markets, those number jumped, like Miami — up 29 percent — and Los Angeles, which was up 20 percent.
Nonbank home mortgage lenders, which the federal government does not regulate as heavily as traditional lenders, are becoming more popular. They accounted for nearly half of all mortgages in the U.S. in 2016, up from 30 percent in 2012, but are considered more risky because of their regulatory status. [Bloomberg] – Dennis Lynch