Major banks laying off mortgage employees

Major banks are laying off thousands of employees who handle mortgages nationwide right now. Meantime, foreclosures just shot up in Richmond and Virginia.

Wells Fargo first cut 2300 mortgage employees nationwide, and will now cut 1800 more. Bank of America plans to close 16 mortgage offices. JP Morgan Chase is cutting up to 15,000 mortgage workers by next year. And Citigroup is cutting 1000 across the country.

So we asked Colonial First mortgage advisor Ron Waddell as an expert in the industry, "What's going on here?"

"In the last six months, mortgage rates have climbed about one percent for a 30-year mortgage," Waddell explained.

That's right, it's jumped from 3.35% in May to about 4.4% now. And the booming demand for refinancing is dropping off.

"We have seen a drop off, the industry has, in refinance applications," he told us.

So why did rates suddenly shoot up? The Federal Reserve announced it will start winding down its bond-buying stimulus program soon.

Meantime, RealtyTrac just reported that from August to September foreclosures are up in Richmond 21%, and up in Virginia 52%. Most experts blame the sequestration that started about six months ago.

But they don't expect the up tick to last. Overall in the third quarter, RealtyTrac reports that Richmond foreclosures are down 28% from the same time last year. And statewide they're down 24%.

Said Waddell, "I think the increase in foreclosures is indicative of the fact that we haven't fully recovered from the either the housing or the economic situation that started four years ago."

So, in a nutshell, what does all this mean for you?

Depending on the interest rate of your current mortgage, you may not want to refinance your home, now that interest rates are higher,

But for home buyers, mortgage rates overall are still historically low and a good deal.

The inventory of homes on the market is still low, which is good for home sellers, but analysts say the market still belongs to the buyer.

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