USA – Wells Fargo & Co, a leading financial solutions provider in the US is boosting its teams that process mortgage loans to prepare for higher mortgage volumes, Reuters has reported.
The move comes after the financial services provider laid off about 1,000 employees in the division in 2018.
According to the memo seen by Reuters, Wells Fargo, the largest U.S. mortgage originator according to Inside Mortgage Finance will be recruiting most of its staff in Des Moines, Iowa and Minneapolis, cities where it laid off hundreds of mortgage employees in these last year.
Although it is not immediately clear how many employees the bank will add, the about-face comes as banks brace for a surge in mortgage activity buoyed by lower interest rates.
Refinancing activity, which accounts for a majority of mortgage applications, has more than doubled from a year ago, according to data released by the Mortgage Bankers Association in October this year.
Purchase activity has climbed 10% from a year ago and business could boom further if mortgage rates drop even more.
This could be more likely now that U.S. monetary policymakers are expected to cut the benchmark interest rate a third time this year at the end of October.
Other large banks that also let go of staff here in 2018 will likely follow Wells Fargo in staffing back up, according to banking sources.
They said some lenders have been struggling to keeping up with the wave of originations following sweeping headcount reductions across the industry.
Large banks have laid off thousands of mortgage employees over the past two years as refinancing applications plunged and amid increased competition from non-bank entrants like Quicken Loans Inc.
The financial services industry tends to fire and rehire thousands of employees as revenue fluctuates, but analysts thought the most recent decline in the mortgage business would be permanent as the process has become more automated.
Wells Fargo which is the fourth-largest U.S. bank by assets has leaned on cost cuts to stabilize its bottom-line amid sluggish revenue trends.
The latest hiring initiative will throw a wrench into the bank’s cost reduction efforts even as it also faced to contend with fresh macroeconomic uncertainty from a changing interest rate environment that’s pressuring lending margins across the industry.