Mortgage refinance slowdown leads to bank layoffs
People walk by a Wells Fargo Home Mortgage branch.
2,100 Bank of America employees are losing their jobs. This follows 2,300 layoffs at Wells Fargo announced in August. A sagging mortgage refinancing market is getting the blame.
With mortgage rates on the rise, refinancing is no longer a good deal for millions of Americans. That means banks are losing business in an area that has been extremely important lately.
“Refinancings have been critical to the banking industry,” says Columbia Business School real estate professor Chris Mayer. “Because purchase mortgages have maintained at such a low level, most of the activity has been refinancing.”
The latest numbers from the Mortgage Bankers Association show the average rate on a 30-year fixed loan at 4.73 percent. That’s more than a full percentage point jump from just a few months ago.
Numbers like those mean a large chunk of the population won’t refinance their mortgages. Banks are losing a lot of business and warning Wall Street of a rough ride ahead in the mortgage business. And unfortunately, many bank employees are losing their jobs.
Click the audio player above to hear Marketplace's Mark Garrison talk about this story with Morning Report host David Brancaccio.