Citigroup sees slowdown in refinancing

NEW YORK -- Like other major banks, Citigroup sees a slowdown in its mortgage-refinancing business amid a rise in long-term interest rates.

“Although the housing market is gaining strength, lower volume of mortgage refinancing will impact our consumer business,” Chief Executive Michael Corbat told analysts during a conference call Monday.

“We’re already taking steps to make sure the mortgage business is sized correctly,” he said.

Federal Reserve Chairman Ben S. Bernanke roiled financial markets last month by fueling speculation that the central bank was poised to scale back monetary stimulus later this year.

The Fed program, known as quantitative easing, has pumped $85 billion into the economy each month by pushing down interest rates to encourage borrowing and spending.

Though Fed officials have since helped calm markets, long-term interest rates have remained off their historic lows, and mortgage rates have risen in recent weeks.

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Last week, JP Morgan Chase & Co. and Wells Fargo & Co. warned of a slowdown in the banks’ refinancing businesses because of the recent rise in rates.

On Monday, Citi said profits jumped 42% in the second quarter. The New York-based bank reported $4.2 billion, or $1.34 a share, of net income. That’s up from $2.9 billion, or 95 cents a share, in the same period a year ago.

Citi stock rose about 1% on Monday. The bank’s shares were up 50 cents to $51.31 in midday trading on Wall Street.

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