E*Trade cuts mortgage staff

E*Trade said Tuesday that it laid off nearly 200 mortgage brokers, as rising U.S. interest rates continued to take the steam out of the home mortgage refinance boom.

Most of the affected employees worked at Huntington Beach, Calif.-based E*Trade Mortgage, which is part of the company's E*Trade Bank division. The layoffs happened last week, according to a company representative.

"The decision to (cut staff) was based on the current status of interest rates and its impact on refinancing volumes," the representative said. "It's a typical supply and demand scenario."

The online financial services company employed more than 3,500 people as of the end of June, the representative said.

E*Trade, an Internet company that pioneered stock trading over the Web, opened its E*Trade Mortgage unit in 2001. At the time, the company said the new unit would help it diversify its business and help it recover from a decline in its securities division as investors pulled out of the stock market.

The company had hired mortgage brokers over the past year or two to keep up with the refinancing frenzy. Last week's cuts return the group's mortgage staff to a more normal level, the representative said.

"People in the mortgage industry expect this," the representative added. "It happens industrywide all the time, as interest rates continue to rise and fall."