The size of payrolls in the nonbank mortgage market shrunk as the summer got underway and the industry entered a season when
Representative estimates for mortgage banker and broker employment fell to 341,200 in June from a downwardly revised 343,700
"Interest rates went up, the price of housing is going up. It's a difficult time," said Helga James, a board member at the National Association of Mortgage Brokers, noting that despite this, originators are seeing demand for their services as they can help find affordable loans.
The small size of June's drop in mortgage jobs supports the hope that reductions over the past year have brought the industry's workforce in line with current loan volumes to the degree necessary to avoid more massive layoffs.
Lenders brought on much of what's now excess capacity during a period of when policymakers maintained low rates as a form of economic stimulus amid the start of the pandemic in 2020. June's estimate was roughly in line with July of that year.
Meanwhile, overall employment — which the Bureau of Labor Statistics reports with less of a lag than housing-finance estimates — slowed from the previous month with the addition of 187,000 in July. The unemployment rate remained historically low at 3.5%.
"The economy is chugging along but certainly not robust," said Lawrence Yun, chief economist, National Association of Realtors, in written commentary on the employment numbers.
Although monetary policymakers are looking for a certain amount of slowing in the economy, they may not want it to be severe, which raises some hopes they could read the relatively weaker number as a reason to slow short-term rate hikes they've been engaged in, he said.
"It could turn into a job-cutting recession if the Fed continues to raise interest rates," said Yun. "If the Fed decides to halt the rate increases, then the housing sector can grow and provide a cushion for the economy."
The Fed is facing a growing amount of backlash for its rate hikes from some consumer advocates like Accountable.US, a nonpartisan watchdog group.
"The more the Fed doubles down on interest rate hikes, the more damage it does to the economy," Liz Zelnick, a director at Accountable.US, said in a press release issued Friday.
In addition to rates, the supply of homes on the market could determine the size of mortgage companies payrolls going forward. Inventory has been very low compared to buyer demand,
New construction has become an increasingly important factor in that equation as many existing homeowners got mortgages when rates were lower and have become reluctant to move, and some of the latest builder job numbers were promising in that context.
"Residential construction employment, including specialty trade contractors, grew by 7,800 in July, similar to the prior month's pace, representing robust job gains," said Mark Palim, deputy chief economist, Fannie Mae, in written commentary published Friday.
