KeyBank is cutting an undisclosed number of positions at its mortgage operations hub in Amherst, as rising interest rates take a toll on mortgage applications.
KeyBank officials declined to say how many employees at the Ridge Lea Road center were affected by cuts put in place after the bank’s consumer mortgage business shrunk by 40% during the third quarter. The bank does not disclose the number of workers it has in the Buffalo Niagara region.
Key periodically adjusts its staffing “based on demand and the economic environment,” said Susan Donlan, Key’s chief communications officer. “As the mortgage business has slowed because of the economic environment, we have had some job impacts across our home lending business, which includes some positions in Buffalo.
“When we make difficult decisions like this, we treat our employees fairly and respectfully, including assisting them in applying for other roles at Key,” she said.
Cleveland-based Key on Thursday said its consumer mortgage originations in the third quarter fell to $1.9 billion from $3.2 billion in the second quarter, a 40% decline. Nationally, the Mortgage Bankers Association said mortgage applications have fallen to their lowest level since 1997, as the 30-year fixed-mortgage rate reached 6.94%, the highest in 20 years.
Purchases accounted for 87% of Key’s mortgage originations in the third quarter, while the refinancing side of the business “basically has completely dried up,” said Christopher Gorman, Key’s chairman and CEO.
“Because we have a relationship purchase business, it will be more durable than others,” Gorman said. “But it’s very rate sensitive. I would anticipate we would decline from the $1.9 billion of originations in the third quarter.”
Key reported net income of $513 million in the third quarter, compared to $616 million a year ago. In an interview following Key’s earnings report, Gorman said he believes the economy remains at risk of tipping into a recession.
“I think the Fed is going to do what they have to do to ensure price stability, and as a result what I believe will happen is, they’ll keep raising rates and rates will be higher for longer.” Gorman said. “I think the prospects for a soft landing are less today than they were six months ago, but still possible.
“My best judgment is there will be a recession, and the question remains and to be determined, is how deep and how long,” he said.