Record Low Rates and Yields Could Revive Originator Hiring

Declines in the weekly 30-year fixed mortgage rate and a key benchmark bond yield to lows never before seen in their recorded histories may put the deeply-cut origination business back in hiring mode by early next year - if it is sustained and all the stars are aligned. "That is a big 'if,'" said Art Frank, director and head of mortgage-backed securities research at Deutsche Bank Securities. A lot of other factors would have to fall into place, but it is possible, said Dennis Hedlund, founder and president of regional industry data forecast firm iEmergent. One originator, Lendability, already has had to speed up its timetable for existing hiring due to the lower rates, according to chief executive officer Paulo LaGreca. The average rate on a 30-year fixed-rate mortgage during the week ended Dec. 18 fell to 5.19% from 5.47% and, according to Freddie Mac, this was the lowest it has ever been since it started its rate survey in 1971. A Freddie spokeswoman said the lowest it had gotten previously was 5.21% in June 2003. Also the 10-year Treasury yield, a mortgage benchmark, has dropped sharply to near 2.1% and hit a low not ever before seen in the recorded trading history of that bond, which goes back to the 1950s. "We're at the lowest levels we've ever seen," said David Ader, head of government bond strategy at RBS Greenwich Capital. The last time the 10-year yield even approached this level was in 1954, when it hit a low of 2.29%, he said.