Regional bank executives see more signs of pressure on mortgages
(Bloomberg) – Regional bank executives are seeing growing signs of strain in the mortgage business as higher interest rates slow home purchases.
“We’re almost at the bottom of our incomes, and you’re starting to see people giving up the ghost,” Bruce Van Saun, chief executive of Citizens Financial Group Inc., said Monday at a financial services conference hosted by Barclays Plc. “People are saying there is too much capacity,” leading to layoffs.
The pandemic inflated home sales, but the Federal Reserve’s aggressive rate hikes faltered the business and led to job cuts across the sector. Mortgage rates hit their highest level since 2008 last week, with the average 30-year loan hitting 5.89%, while the volume of applications has fallen more than 50% this year. U.S. pending home sales in July fell to their lowest level since the pandemic began.
US Bancorp Chief Financial Officer Terry Dolan told the conference that the Minneapolis-based bank expects its mortgage income to decline 30% to 35% this quarter from the previous three months.
The biggest American banks are also reacting. Citigroup Inc. joined the ranks of companies that cut their mortgage workforce earlier this month, eliminating less than 100 positions. JPMorgan Chase & Co. in June cut hundreds of mortgage lending staff and reassigned hundreds more as the housing market cooled, and Wells Fargo & Co. plans to scale back its sprawling mortgage operations.
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