Wells Fargo said Wednesday it’s laying off 284 employees in Charlotte as the bank trims its mortgage work force amid rising interest rates.
The positions are among 2,323 nationwide job cuts the company announced Wednesday, citing declining demand for refinancings driven by the higher rates.
The Charlotte job cuts are mostly in Wells Fargo’s fulfillment division. Wells Fargo spokesman Josh Dunn said most of the 2,323 positions being eliminated countrywide are also in that division, which processes mortgage refinance applications.
“It’s back-office support, essentially,” he said.
Wells, the largest U.S. mortgage lender, says it employs 20,750 in the nine-county Charlotte area. The 284 jobs, therefore, represent 1.4 percent of that work force.
The job cuts underscore that home refinance volumes that have boosted Wells to record profits in recent quarters are continuing to taper off. For more than a year, applications flooded in as homeowners sought to lock in historically low mortgage rates. But those rates have inched up steadily over the past few months and are now about a full percentage point higher than they were a year ago, according to data from Freddie Mac.
Wells Fargo said refinancings comprised 56 percent of its mortgage originations in the second quarter, compared with 62 percent a year ago.
Wells Fargo executives have repeatedly told analysts that they expected to be able to quickly scale back the bank’s mortgage division as refinancing activity inevitably declined.
“We are very good at sizing the business based on what’s going on,” CEO John Stumpf told analysts in a July conference call. “We’ve done that many times.”
The bank has not turned bearish on housing, however. Executives have pointed to signs of improvement in the market overall as an indication that new home purchases could pick up some of the slack.
Stumpf also said that waning refinance volume from rising interest rates tends to lead to better credit quality and consumer and business confidence.
“I would take that trade all day long,” Stumpf said on the conference call.
On Wednesday, Dunn, the bank spokesman, said industry trends suggest refinance activity could continue to fall in coming months.
“While interest rates remain very favorable by historical standards for homebuyers and lenders, the fast-paced consumer demand for mortgage refinancing we experienced throughout 2012 and early 2013 is slowing,” he said.
The bank said it’s given employees 60 days’ notice of the layoffs.
Dunn said that, despite the job cuts, Wells expects its employment level in Charlotte to remain near 20,750 as the bank hires in other lines of business.
“This is in no way an indicator that Wells Fargo is pulling back from Charlotte,” he said. “This is an industry trend. This is not just Wells Fargo.”