Mortgage companies cut 2,500 full-time employees from their payrolls in June despite record low mortgage rates as home sales continued to sag in a slowing U.S. economy.
The U.S. Bureau of Labor Statistics reported that employment in the mortgage banker/broker sector fell to 244,000 full time positions in June from 246,500 in May. BLS revised the May number downward by 400 workers. (The mortgage job figures lag the overall employment numbers by one month.)
While the decline in home sales has been severe, mortgage firms appear to be living off a continuing wave of refinancings.
"Refinance volume has been extremely heavy in the last 45 days," said Scott Stern, chief executive of the Lenders One, a cooperative of mortgage bankers.
Some borrowers are being offered rates as low as 3% on 3-year, 5-year and 7-year hybrid adjustable-rate mortgages. Stern himself is refinancing. "When mortgage bankers are refinancing you know rates are low," he said.
Scott Olsen, a senior economist at Wells Fargo, expects employment in the mortgage industry will flatten out soon. "Refinancings are helping. But we are not going to see a lot of hiring either," Olsen said. "It is going to be a disappointing slow recovery for housing."
Friday's job report showed private sector firms hiring 71,000 workers in July, which is better than the 31,000 new hires in June.
"Private sector job growth in pretty anemic at this point," the Wells Fargo economist said. "The hiring is coming from the manufacturing and health care sectors and that's it," he said. Job losses in the construction and financial services sectors continued in July.
