Atlanta-based SunTrust Banks Inc. has informed employees the company will cut 800 positions in its mortgage business, joining other competitors in shedding jobs as interest rates rise, putting a damper on refinancing.
SunTrust spokesman Michael McCoy told The Atlanta Journal-Constitution on Wednesday that the cuts “reflect current market conditions, particularly the reduced volume of mortgage loan refinancing.”
Many homeowners rushed to refinance home loans at rates that hovered around 2 percent a year and a half ago, a consequence of the downturn in the housing market. The booming business prompted many lenders to increase their payrolls to handle the onslaught.
The boom in refinancing, however, came to a halt in June, said Christopher Marinac, the director of research at FIG Partners LLC, which tracks the banking industry. As the economy improved and housing market rebounded, interest rates also started to climb and are now above 4 percent, making loans more costly and pushing down demand. Home prices and closing costs also have been on the rise, the latter an attempt by lenders to make up for the loss in loan business.
Many of the major banks, including Bank of America, Citigroup and Wells Fargo, have announced thousands of job cuts in their mortgage operations in recent months. Bank of America announced recently that it will cut more than 2,000 jobs and close 16 mortgage offices. Wells Fargo reported in the third quarter that it shed more than 5,000 jobs during the period.
“It’s not unusual for the mortgage arena to have these surges in hiring and cutbacks,” Marinac told the AJC on Wednesday. “SunTrust is a little late in making a move.”
McCoy, the SunTrust spokesman, said the bank’s staff reductions will occur over the next several months.
“We expect attrition to account for a portion of the reductions, however, many of those affected by this announcement will be notified toward the end of October that their positions are being eliminated,” McCoy said.
The spokesman would not say where the cuts would be geographically, and it was not known how many would be in metro Atlanta. He would only say that 100 of the positions will be in Richmond, Va., where its mortgage business is based. SunTrust currently has about 4,200 employees in its mortgage operations.
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