Some of the nation’s largest lenders — including Wells Fargo & Co., JPMorgan and Bank of America — say they’re laying off workers because they expect rising mortgage rates will dent their business, the Wall Street Journal reports.
For example, Bank of America got rid of 2,100 employees because of a slowdown in refinance activity, and Wells Fargo, which expects its loan originations to drop 30 percent from the second quarter to the third quarter, to approximately $80 billion, has trimmed 3,000 jobs since July.
Paul Miller, an analyst with FBR Capital Markets & Co., said his firm expects mortgage originations will drop from $1.75 trillion 2012 to $1.654 trillion this year and $1.46 trillion next year before rebounding in 2015.
While rising mortgage rates are widely expected to spell the end of the refinancing boom, that doesn’t mean that demand for purchase loans — which is driven largely by mortgage underwriting standards and housing affordability — will suffer.
In their latest forecast, economists at Fannie Mae said refinancings could plummet by 69 percent from this year to next, from a projected $1.12 trillion in 2013 to $345 billion in 2014. But Fannie Mae sees purchase mortgage originations growing by nearly 19 percent during the same period, to $740 billion. Source: Wall Street Journal.
