Wells Fargo and Citigroup are laying off hundreds of employees at their mortgage units, one of the most tangible signs yet of the falloff in refinancings and the painful shift underway in the mortgage market.

Wells Fargo, which originates one out of three mortgages in the U.S., is laying off 350 employees nationwide because higher interest rates have led to a dramatic drop in home loan refinances. Citi shuttered a Danville, Ill., refinancing office this week and laid off 120 workers, according to a memo sent to employees.

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