WASHINGTON — Nonbank mortgage lenders and brokers hired 2,700 full-time employees in December, according to the Bureau of Labor Statistics.
Employment in the nonbank mortgage sector totaled 341,500 in December, up from 338,800 full-time employees in the previous month. November's estimates were revised down by 1,000 jobs, as part of updates to the data for all of 2017 that reflect year-end adjustments the BLS makes to the sample-based estimates it uses in its monthly employment statistics.
This year's revisions were minor and the overall trend — increased hiring in the spring and early summer, followed by declines in the fall — did not deviate from original estimates. But the size of the overall industry was not as large as initially projected.
Still, the nonbank sector finished the year with 8,100 more workers than in December 2016. It's the fourth straight year of job gains, but the smallest increase since 2014, when only 1,700 jobs were created.
December was the third month in 2017 when nonbank employment was above 340,000, a threshold that hadn't previously been crossed in more than 10 years, dating back to November 2007. But headcounts remain well off the February 2006 peak, when nondepository originators employed 504,500 workers.
Lenders added jobs last year despite a decline in overall originations, as rising interest rates made refinancing less attractive and limited housing inventory curtailed purchase lending.
With 2018 forecasts calling for an increase in home sales offset by even fewer refinance originations, it remains to be seen whether lenders will add even more workers or begin to make cuts this year.
Refinance mortgages are easier to originate than purchase loans and can be a key profit center for nonbank originators. But the Mortgage Bankers Association estimates refinancings will drop to $426 billion in in 2018, down from $600 billion last year.
Fannie Mae economists are forecasting single-family mortgage originations will total $1.73 trillion in 2018, compared to $1.83 trillion in 2017, due to a drop in refinancings. Refinancings will account for 31% of mortgage originations in 2018, compared to 38% last year, according to a Fannie Mae Jan. 26 report.
Mortgage purchase volume is expected to edge up to $1.18 trillion in 2018 from $1.11 trillion last year, according to the MBA.
Tight inventory of new and existing homes is also a headwind for the housing market, though that may improve this year. Economists at Well Fargo Securities estimate single-family housing starts will rise 11.2% in 2018, to 940,000 units. And new home sales will hit 680,000 in 2018, up from 615,000 last year, according to a Jan. 17 WFS Tax Reform and Housing report.
"Lower corporate tax rates will make homebuilding more profitable, particularly at lower and middle price points dominated by the large national homebuilders," the Wells economists said.
The BLS industry-specific employment data lags overall employment estimates by one month. Total nonfarm employment increased by 200,000 jobs in January and the unemployment rate remained unchanged at 4.1% for the fourth straight month, the BLS also reported.
"The labor market started the year strong," Fannie Mae chief economist Doug Duncan said in a statement. In addition to the increase in headcounts, the BLS also reported a 2.9% increase in wages year over year, which could lead to higher interest rates.
"The big news was the pop in annual wage gains to the strongest pace since June 2009," Duncan added. "One can argue that today's acceleration in wage growth could embolden the Fed to hike interest rates more than the three times that the market now expects."