Wells Fargo, the biggest U.S. mortgage lender, is eliminating about 1,800 more jobs in its home-loan production business as rising mortgage rates curtail borrowers' demand for refinancing.
The reductions are in addition to 3,000 earlier this quarter, Tom Goyda, a spokesman for the San Francisco-based bank, said in an interview yesterday. Those included 2,300 announced Aug. 21 and smaller cuts prior to that, Goyda said.
Wells Fargo is cutting jobs as higher borrowing costs slow refinancings and new home purchases fail to compensate for the decline. The bank may originate about $80 billion in home loans in the third quarter, a 29 percent drop from the three months that ended June 30, Chief Financial Officer Timothy Sloan said Sept. 9.
Wells Fargo was the biggest employer among U.S. banks at midyear with about 274,000 people. The workers whose positions are being cut received 60 days' notice, Goyda said.
Mortgages typically are divided into those for refinancing existing loans and those for home purchases. While refis are mainly tied to the level of interest rates, purchase mortgages are tied to home-sale activity.
Borrowing rates climbed in recent months amid speculation that the Federal Reserve would scale back its $85 billion-a- month in purchases of Treasury bonds and mortgage-backed securities. The central bank yesterday said it will continue the purchases, saying it needs more evidence of lasting improvement in the economy.