JPMorgan lays off hundreds of people in home lending business after rate spike

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(Bloomberg) – JPMorgan Chase & Co. is laying off hundreds of home lender workers and reassigning hundreds more this week as rapidly rising mortgage rates dampen demand in what was a hot housing market .

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The total affected will be more than 1,000 American workers, about half of whom have been transferred to different divisions of the bank, according to people familiar with the matter who asked not to be identified while discussing personnel matters.

“Our hiring decision this week was the result of cyclical changes in the mortgage market,” a JPMorgan spokesperson said in a statement Wednesday. “We have been able to proactively move many affected employees into new roles within the company, and we are working to help the remaining affected employees find new employment within Chase and the outside.”

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The cuts follow the Federal Reserve’s decision to raise interest rates to rein in inflation, which has been high for decades. Last week, the Fed announced a 75 basis point hike, the biggest hike since 1994. Thirty-year mortgage rates have already more than doubled from their all-time high in January 2021.

Read more: Mortgage Surge Towards 6% Holds Back Red-Hot Housing Market

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Rapidly rising rates have begun to cool a housing market that has reached a frenzy during the pandemic. Sales of previously owned U.S. homes fell for a fourth month in May to the lowest level in nearly two years, according to National Association of Realtors data released this week.

Wells Fargo & Co., the largest mortgage lender among U.S. banks, has also laid off and reassigned employees from its home loan division, according to people familiar with the business, who asked not to be identified while discussing d private information.

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Earlier this month, companies such as Compass Inc. and Redfin Corp. announced their intention to reduce their workforce amid a cooling US housing market. Compass said in a regulatory filing that it will cut about 10% of its workforce, or about 450 employees, while Redfin plans to lay off about 6%, or about 470 workers.

(Updates with additional details, Wells Fargo layoffs beginning in second paragraph.)

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