JPMorgan’s mortgage business It has become the latest casualty of layoffs as the Fed pushes up interest rates and reduces demand for housing in an effort to rein in sizzling inflation.
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A source familiar with the matter confirmed to FOX Business that hundreds of employees will be laid off, while hundreds of others will be reassigned to different parts of the bank.
“Our staffing decision this week is due to Cyclical changes in the mortgage marketA JPMorgan spokesperson told FOX Business. “We were able to proactively move many of the affected employees to new positions within the company and are working to help the remaining affected employees find new jobs both inside and outside of Chase.”
Last week, the Fed Raise the benchmark interest rate by 75 basis points For the first time in nearly three years. The move put the key benchmark federal funds rate between 1.50% and 1.75%, the highest level since the pandemic began two years ago.
Soaring mortgage rates hit ‘hardest’ for first-home buyers: real estate expert
Officials also laid out an aggressive rate hike path for the rest of the year. Policymakers expect interest rates to hit 3.4 percent by the end of 2022, the highest level since 2008, according to new economic forecasts released after the Fed’s two-day meeting.
Except for JPMorgan, Wells Fargo has also been laying off or reassigning employees in its home loan business.
“We conduct displacement in a transparent and thoughtful manner, and provide assistance such as severance packages and career counseling. In addition, we are committed to retaining as many employees as possible,” A Wells Fargo spokesperson told FOX Business. “About 35% of those impacted by home loans so far this year are in other roles within Wells Fargo.”
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Redfin also announced last week that it would Lay off about 8%citing a nearly 20% lower-than-expected drop in real estate demand in May.
According to Freddie Mac, Average Commitment Rate The rate on a 30-year traditional fixed-rate mortgage was 5.23% in May, up from 4.98% in April. The average commitment rate for the full year 2021 is 2.96%.
Meanwhile, existing home sales fell 3.4% month-over-month to a seasonally adjusted annual rate of 5.41 million units in May. Existing-home sales fell 8.6% compared to the same period last year.
“Given the housing affordability challenges brought on by the sharp rise in mortgage rates this year, sales are expected to decline further in the months ahead,” Lawrence Yun, chief economist for the National Association of Realtors, said in a statement. , affordable homes are selling quickly, and inventory levels still need to rise significantly — nearly doubling — to cool house price appreciation and give homebuyers more choice.”
Median Existing Home Price for All Home Types Prices in May were $407,600, up 14.8% from May 2021, thanks to price increases across all regions. Properties typically stayed on the market for 16 days in May, down from 17 days in April 2021 and 17 days in May 2021. About 88% of homes sold have been on the market for less than a month.
Total housing inventory was 1.16 million at the end of May, up 12.6% from April but down 4.1% from the previous year. At the current sales pace, the supply of unsold inventory is 2.6 months, up from 2.2 months in April and 2.5 months in May 2021.
Megan Henney of FOX Business contributed to this report. Bloomberg was the first to report on the story.