Rising Rates Cause Layoffs at Phoenix-Area Mortgage Firms

By Angela Gonzales | Phoenix Business Journal

A rise in mortgage interest rates over the past several months has caused a drop in refinance applications, leading to mortgage lender layoffs.

The robust housing market in 2020 and 2021 created a labor shortage in the mortgage and title industries, causing firms to hire more people to keep up with transaction volumes, said Steven Hensley, advisory manager for Zonda housing market research firm.

“Now that the housing market has cooled, and less transactions are occurring, it is likely that some companies are realizing that they are now over-staffed,” he said. “This is part of the cyclical nature of the housing market.”

Michael Metz, operations manager for Scottsdale-based VIP Mortgage Inc., said increased rates have caused refinance volume to plummet, and purchase volume has dipped because of concerns about housing inventory and payment affordability. It has resulted in the lay off of 26 employees at the company, he said.

“This has created one of the most challenging markets in the mortgage industry in decades, and has been tough on our VIP family,” he said. “We made the hard decision to reduce our staff size by about 5%, but thankfully haven’t had to make some of the drastic cuts we’ve seen in the market, due to a prior focus in purchase business and expansion into new markets.”

VIP Mortgage was ranked No. 1 on the Business Journal’s 2021 list of the largest Phoenix-area mortgage lenders and brokers list, with mortgage volume of $1 billion. The 2022 version of that list will be published on Sept. 16.

Over the past few months, large banks such as Wells Fargo & Co. and JPMorgan Chase & Co. have pulled back on their mortgage lending.

In June, JPMorgan confirmed it was cutting more than 1,000 employees from its home-lending unit as a result of cyclical changes in the mortgage market.

“We were able to proactively move many impacted employees to new roles within the firm and are working to help the remaining affected employees find new employment within Chase and externally,” according to a Chase statement in June.

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