Aug 22, 2013 6:45 PM by CNN
NEW YORK - Wells Fargo on Wednesday announced a round of layoffs in its mortgage business, saying the recent sharp run-up in interest rates is taking a toll on its refinancing business.
The USA's largest mortgage lender sent 60-day notices to 2,300 people in its mortgage division across the country. Though the bank doesn't break out figures for that business, its overall consumer lending division now has 70,000 workers.
"The main driver is less refinancing volume than we saw last year and even early this year," says Tom Goyda, a spokesman for Wells Fargo Home Lending. "We needed to respond to better align our team with the market."
Record-low interest rates had driven refinancing up to 70% of all mortgage originations in the first half of 2013, Goyda says, but industry trends suggest that now has dropped to half of overall application volume and will fall even more in coming months.
Continuing that slowdown, on Wednesday the Mortgage Bankers Association said mortgage applications fell 4.6% in the week ended Aug. 16.
The jobs cuts come as Wells Fargo has been turning in a strong performance. On July 12, it reported record quarterly net income of $5.5 billion, up 19% from a year earlier - and its 14th consecutive quarter of growth in diluted earnings per share. At the time, Wells Fargo and other banks were predicting a big decline in mortgage lending the second half of the year.
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