Wells Fargo, once the No. 1 player in mortgages, is stepping back from the housing market, announcing last week it was cutting more than 500 employees in its home lending division. The bank said it was making the move to reduce costs, but the move also comes as the mortgage market has become increasingly competitive and as interest rates remain at historic lows. The bank has been struggling to keep up with rising mortgage demand and its share of the market has been slipping. It held a 6.1% share of the mortgage market in the first quarter, down from 8.2% a year earlier, according to Inside Mortgage Finance.
The move to cut 500 employees in the home lending division is part of Wells Fargo’s larger effort to reduce costs, which has included reducing its number of branches, as well as cutting staff in its mortgage operations. Wells Fargo has also been rethinking its strategy in the mortgage market, refocusing its efforts on higher-end loans.
The move to cut jobs in the mortgage division reflects the shift in the overall mortgage market. With interest rates at historic lows, many borrowers have been refinancing their mortgages, making it difficult for lenders to make money on mortgage originations. At the same time, competition has become increasingly fierce as other banks, such as Quicken Loans, have gained ground in the market.
In addition to cutting jobs in the mortgage division, Wells Fargo is also looking for ways to streamline its mortgage operations. The bank is investing in technology to help automate many of the processes involved in mortgage origination and underwriting. Automation is expected to help reduce costs and improve efficiency.
Overall, Wells Fargo’s move to cut jobs in its home lending division is indicative of the changing mortgage market. Low interest rates have sparked competition among lenders and made it difficult for them to make money on mortgage originations. As a result, banks have had to make difficult decisions, such as cutting jobs in their mortgage divisions, in order to remain competitive.