Nonbank mortgage jobs increase as broader employment growth weakens

Jobs at nondepository lenders and brokers are increasing, but at a slower rate than they have over the past several months. With gains in broader employment also weakening, there’s more downward pressure on rates that could revitalize loan activity and hiring.

Total nonbank mortgage payrolls rose to an estimated 378,300 in March from 374,400 the previous month and 314,900 a year ago, the Bureau of Labor Statistics reported Friday. The relatively weak addition of 266,000 jobs to overall employment in April fell short of forecasts. The broader payroll numbers, which are reported with less of a lag than mortgage industry breakouts, drove rate-indicative 10-year Treasury yield below 1.5% for the first time since March, at one point this week. That suggests that employment uncertainty, which could impact some borrowers’ ability to qualify for or pay loans, could become a concern among lenders and brokers.

“This report suggests that the rate of improvement in the job market is going to be much less consistent than other other indicators would indicate,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, said in an emailed press statement on Friday.

At 5.33%, the MBA’s latest number for the quarterly mortgage delinquency rate was 105 basis points higher than the historic average. The MBA defines as delinquent any loan where there was not a payment made in line with the mortgage’s original term. The U.S. unemployment rate, which often is correlated with delinquencies, rose to 6.1% in April from 6% the previous month. Prior to the pandemic, that rate generally was closer to its historic low near 3.5%.

Mortgage lenders are preparing for a year in which loan volumes will be relatively healthy but won’t match the record numbers seen in 2020, particularly in the more credit-sensitive government-insured market.

“Recent economic forecasts for 2021 originations range from $3.3 trillion to $4 trillion, while average forecasts for 2022 originations remain strong at $2.6 trillion,” Andy Chang, chief operating officer at government lender PennyMac Financial Services, noted during the company’s recent first quarter earnings call on Thursday. The company reported net income of $376.9 million for the first quarter of 2021, up slightly from $306.2 million during the same period a year ago but down from $452.8 million in the previous fiscal period.