Wells Fargo & Co., the biggest U.S. home lender, is cutting 2,300 jobs from its mortgage-production unit because higher interest rates are reducing demand for refinancings, according to people with knowledge of the matter.

Other smaller cuts had been made in the past few weeks around the country, according to the people, who asked not to be identified because the changes haven’t been publicly disclosed. The cuts would equal about 20 percent of the 11,406 mortgage loan officers employed by the San Francisco-based company at the end of March, according to a presentation.

Wells Fargo has said mortgage lending will slow for the rest of this year as higher interest rates make refinancing less attractive. Those loans, which made up 70 percent of the mortgage market during the first half, slid to about 50 percent of applications recently and could fall further in the months ahead, according to a staff memo from Franklin Codel, the bank’s head of mortgage production.

“We’ve had to recalibrate our business to meet customers’ needs ― and to ensure we’re operating as efficiently and effectively as possible,” Codel wrote. “Unfortunately, displacements within our team are necessary.”

Quarterly mortgage originations will decline to less than $100 billion in the third quarter, forcing the lender to adjust the size of its staff, Chief Financial Officer Timothy J. Sloan said during the company’s second-quarter earnings call.

Employees received 60 days notice Wednesday and the bank is trying to retain as many as possible by finding them other jobs at the company, according to Jennifer A. Temple, a spokeswoman for the bank.

Shares of the company slipped 0.5 percent to $42.36 in New York trading, trimming its advance to 24 percent this year compared with the 25 percent gain in the 24-company KBW Bank Index. Wells Fargo was the largest employer among U.S. banks at midyear with about 274,000 people. 

(Bloomberg)