Nonbank Mortgage Lender Employment Hits 18-Month High

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With the traditional home buying season in full swing, mortgage banking and brokerage firms added 3,300 full-time employees to their payrolls in May.

Employment in the mortgage banking/broker sector grew to 289,900 in May, after firms added 2,100 jobs in April, the Bureau of Labor Statistics reported Thursday. April's initial estimate was also revised upward by 300 jobs on Thursday. The bureau's industry-specific estimates lag its national reporting by one month.

The May figures mark the fourth straight month of mortgage employment gains and represent the largest one-month jump in hiring since November 2014, when nonbank lenders added 3,800 jobs. Total employment for the sector is at an 18-month high, going back to November 2013, when mortgage bankers and brokers employed 290,300 workers.

Nonbank mortgage firms generally add more employees to their payrolls in the spring to meet demand for the midyear home buying season. But while the home sales and refinancings started the year somewhat healthy, much of mortgage lenders' recent employment growth has been for nonsales employees who handle back-office compliance functions — a trend that's resulted in a significant increase in the cost to originate mortgages.

Still, efforts to draw more first-time homebuyers into the market are beginning to show some early positive results. Following the 50-basis-point cut to Federal Housing Administration mortgage insurance premiums took effect in late January, FHA endorsements of new loans has grown nearly 48% year-over-year from February to April.

The FHA endorsed 103,400 single-family loans in April, up from 83,440 in March and 50,410 in February, according to FHA data. During the same three months, the number of purchase loans increased 19% compared to 2014. In addition, first-time homebuyers accounted for 82% of all FHA-endorsed purchase loans, compared to 81.3% during the same period.

"Demand from first-time buyers has clearly increased, as stronger job growth and few layoffs have bolstered confidence and restored a comfort level to potential buyers to put down roots and purchase a home," according to economists at Wells Fargo Securities. The June 30 WFS report noted that homes priced for $150,000 or less have accounted for a rising proportion of new home sales.

Sales of existing homes in May hit their highest mark since 2009 and first-time buyers are "scooping up properties," according to a midyear forecast by the National Association of Realtors. "A lower fee on FHA mortgages is helping," the report adds.

Overall, the U.S. economy added 223,000 new jobs in June, according to the BLS. The May payroll estimates were revised downward to 254,000 new jobs. The unemployment rate fell to 5.3% in June, from 5.5% in the prior month.

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