The Virginia-based lender will stop issuing mortgage and home equity loans as interest rates become increasingly challenging, loan growth slows and competition strengthens, a company spokesperson confirmed to TheStreet.
Capital One will lay off 900 employees as a result of shedding the mortgage and home equity loans business units. The job cuts will affect associates working in Plano, Texas; St. Cloud, Minnesota; and Melville, New York.
Interest rates had been at historic lows, but as they increase, borrowing becomes more expensive. That's stirred trouble for Capital One.
"Home lending is a complex and highly competitive business," the spokesperson said. "It is a crowded field with multiple players and borrowers have a broad range of options. Given the challenging rate environment in this space, we are structurally disadvantaged and we are not in a position to be both competitive and profitable."
Capital One will continue to service existing home loans portfolios, the spokesperson added.
Capital One stock dipped 0.8% to $89.29 in early afternoon trading Wednesday.
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