Reuters Writes: Citigroup to cut 1,000 mortgage jobs, mostly in Las Vegas

(Reuters) - Citigroup Inc (NYS:C) said it is eliminating about 1,000 jobs in its U.S. home mortgage business, making it the latest bank to lay off staff as higher interest rates cut into demand for new loans and refinancing.

The bank is cutting about 8 percent of the 13,000 jobs in its mortgage division, with most of the cuts - about 760 - taking place in Las Vegas.

With mortgage rates having risen to their highest in two years, applications to refinance home loans plunged in early September to their lowest in nearly four years.

Roughly 800 of the jobs being eliminated are in sales, underwriting and fulfillment and reflect reduced demand for loans. Another 200 jobs are being cut because the company has less work to do on defaults because of higher house prices and fewer delinquencies, a person familiar with the matter said.

The 100% increase in interest rates over the last 12 month is having its effect. We are beginning to see cracks in the real estate market develop all over the place. Citigroup eliminating about 1,000 jobs in its mortgage division is a clear sign of that.

So, is the plunge in September loan applications for refinancing an indication that the real estate market has topped and is starting to roll over?

It's too soon to tell at this stage. Plus, the real estate market is highly local. As I have mentioned before there is no doubt that the real estate market will go down hard. However, the timing of any such decline is a little bit more complicated. There are too many crosscurrents in the market to identify the exact top for the Nationwide market.

However, if you are involved in transactional real estate, right now would be a good time to start unwinding all of your position.

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