JPMorganChase has said it’s cutting jobs in its mortgage lending business amid tightening monetary policy that has seen mortgage rates pushed above 6%.
The nation’s biggest bank said last week that the decision was the result of “cyclical changes” in the mortgage market. “We were able to proactively move many impacted employees to new roles within the firm and are working to help the remaining affected employees find new employment within Chase and externally,” it said in a statement.
The bank did not confirm how many employees have been moved or laid off, but Bloomberg cited anonymous sources as saying around 1,000 staff have been affected by the move, with around 500 being forced to leave.
Two months prior, Wells Fargo & Co. also announced job cuts in its lending business, including hundreds of mortgage application processors.
The industry has been left reeling by lower demand for mortgages, with non-bank lenders such as Mr. Cooper, Loan Depot, Pennymac, Guaranteed Rate, Fairway Independent Mortgage, Interfirst Mortgage, Movement Mortgage and Better.com all laying off staff earlier this year as rates jumped past the 5% mark.
What’s more, Bloomberg said more job cuts in the industry are likely following the Federal Reserve’s decision to hike the federal funds rate by an additional 75 basis points last week.
Jobs were cut at JPMorgan amid a huge decline in mortgage applications. According to its first quarter earnings report, origination volume shrank by 41% in the January to March period, compared to the previous quarter. Meanwhile home lending net revenue was down 20% compared to one year earlier, though it did increase by 8% on a sequential basis.
JPMorgan Chairman and Chief Executive Jamie Dimon told analysts during the earnings call that he expects difficult days ahead, blaming both higher inflation and the war in Ukraine.
“Those are storm clouds on the horizon that may disappear; they may not. That’s a fact,” he said.