When rates were rising, big banks slashed their mortgage staffs. Now, with lower rates bringing a surge in demand, banking giants are unprepared – and customers aren’t happy
Big banks like Wells Fargo and Bank of America were caught unprepared by the surge in mortgage applications, and now they’re scrambling to keep up with the demand – leading to longer closing times and dissatisfied borrowers, according to a Reuters report.
The mortgage industry has seen a spike in demand since the Federal Reserve began cutting rates this summer. That’s left big lenders seriously understaffed – especially since many of them cut hundreds or thousands of mortgage jobs when interest rates were rising.
Bank of America is currently taking an average of 41 days to close a purchase loan, Reuters reported. Refi closings have climbed to 60 days. While Reuters couldn’t obtain Wells Fargo’s average closing time, a person familiar with the bank’s mortgage business told the news service that some loans were taking more than 120 days to close.
Wells Fargo recently announced plans to beef up its mortgage team to deal with the sudden increase in demand. The banking giant is shorthanded in large part because it laid off about 1,000 mortgage employees last year as part of continuing cost-cutting efforts.
“Wells Fargo Home Lending is working to provide a great experience for our customers and meet their expectations during this period of increased demand,” spokesman Tom Goyda told Reuters.
Bank of America has also begun hiring additional mortgage staff.
Mortgage applications have steadily risen since the Fed began cutting rates, according to the Mortgage Bankers Association. In their quarterly earnings filings, Bank of America, Wells Fargo and JPMorgan Chase all reported significant spikes – between 26% and 58% – in mortgage originations, Reuters reported.
Although big banks are trying to gear up to meet the increased demand, they’re still leaving many potential homebuyers with bad tastes in their mouths.
“They have low interest rates, they get the buyers in – and then they just completely destroy the deal,” New Jersey realtor Cara Campos told Reuters.
