Dive Brief:

• JPMorgan Chase is laying off hundreds of employees in its home-lending division and reassigning hundreds more, sources at the bank told Bloomberg on Wednesday. 
• The move, which follows last week’s rate hike by the Federal Reserve, comes as rising home mortgage rates are quelling demand in the housing market.
• “Our staffing decision this week was a result of cyclical changes in the mortgage market,” a JPMorgan spokesperson told Bloomberg.

Dive Insight:

Sources at the New York City-based bank said the staffing changes will impact more than 1,000 employees.

“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,” a bank spokesperson told Bloomberg.

The drop in demand for mortgages is also impacting JPMorgan’s refinancing business.

“Refinance is dramatically decreasing. There is not the capacity to support the staffing model, unfortunately,” a source at JPMorgan told CNN Business on Wednesday.

In its continuing efforts to fight rising inflation, the Fed on June 15 raised its benchmark interest rate by 75-basis points to a range between 1.5% and 1.75%.

Wells Fargo, which is also dealing with a decline in mortgage volume, made its own round of job cuts back in April. 

Amid a 33% year over year drop in mortgage origination volume, the bank said the decision to pare back its mortgage division is the result of cyclical changes in the broader home lending environment.

“We are committed to retaining as many employees as possible and will do everything we can to help them identify other opportunities within Wells Fargo,” the San Francisco-based bank said in statements to Business Insider and American Banker.

During an April earnings call, Wells Fargo CFO Mike Santomassimo blamed a decrease in refinance activity — along with higher interest rates — for what he called the steepest quarterly decline in the mortgage arena since 2003.

In addition to Wells Fargo and JPMorgan, other mortgage specialists have announced job cuts amid rising rates. 

Mortgage tech company Blend announced in April it would cut 200 positions across the company, representing 10% of its total workforce. 

And Better.com has reportedly trimmed half of its workforce — or more — since December, according to Fast Company.