Wells Fargo cut hundreds more mortgage employees Thursday, the latest in a series of reductions across the industry after higher interest rates brought the pandemic-era home-lending boom to halt.
The reductions took place across the country, according to people familiar with the plans, who asked not to be identified discussing private information. The latest wave comes amid ongoing Federal Reserve rate hikes to tame persistent inflation, pushing mortgage rates toward their highest levels in two decades. Refinancings have dried up and some potential homebuyers have been sidelined in the process.
"We regularly review and adjust staffing levels to align with market conditions and the needs of our businesses," a representative for Wells Fargo said in a statement.
The latest reductions in the bank's mortgage unit add to thousands already made by Wells Fargo this year. The firm is not alone: Rival JPMorgan Chase cut hundreds of home-lending staff and reassigned hundreds more in June, with further reductions since. Nonbank lenders, which swelled to dominate the mortgage business since the financial crisis, have also been slashing their ranks.
Wells Fargo, the biggest home lender among U.S. banks, expects that business to "remain challenging in the near term" on higher rates, Chief Financial Officer Mike Santomassimo told investors in October. The division reported a 70% drop in fees for the first nine months of this year.
The firm is planning a longer-term retreat in the mortgage business, abandoning its longtime strategy to be the biggest in the industry, Bloomberg reported in August. Over the past three years, Chief Executive Officer Charlie Scharf has been reshaping Wells Fargo's businesses as part of an effort to move past a series of scandals. Since the middle of 2020, when the firm became the first major bank to resume layoffs following a pause at the onset of the COVID-19 pandemic, he's brought the workforce down by 13% and ceded the title of the U.S. bank with the biggest workforce to JPMorgan.