Citigroup is the latest big bank planning mass layoffs in its mortgage division due a decline in originations resulting from rising mortgage rates.
The bank is planning to lay off an estimated 2,200 mortgage workers by early next year and will close its CitiMortgage office in Danville, Ill., Fox News reports.
The news follows recent reports of major staff cuts at the mortgage divisions of Bank of America, JP Morgan Chase and Wells Fargo, also due to declining origination and refinance volume. The four banks will lay off an estimated combined 22,300 workers in the coming months, according to the report.
The Mortgage Bankers Association reported on Wednesday that mortgage application volume for the week ending Sept. 6 decreased 13.5% on an unadjusted basis from the previous week. However, that week included the Labor Day holiday weekend, when home sales have been historically very low. On an adjusted basis, mortgage application volume was down about 3%, compared to the week prior.
The average interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.8% from 4.73% the week prior, the MBA says, while the average interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.84% from 4.71%.
The layoffs at Citigroup were expected. In April, Citigroup's chief financial officer, John Gerspach, told analysts that the bank was ‘not looking to significantly grow share in mortgages,’ other than through making loans to its existing retail bank customers, according to the Fox News report. Late last year, Citigroup CEO Michael Corbat said the bank would be laying off up to 11,000 workers, most of them in its mortgage division.
Rising mortgage rates have also resulted in drastic cuts at JPMorgan Chase, which is expected to eliminate up to 19,000 jobs – including about 15,000 in its mortgage division – over the next two years. What's more, Wells Fargo recently cut more than 3,000 jobs in its mortgage fulfillment division after forecasting that its origination volume would drop about 30%. And earlier this week, it was reported that Bank of America would be cutting 2,100 jobs and closing 16 mortgage offices as origination volume declines.