Low mortgage rates drove payroll expansion for nondepository lenders and brokers, while also contributing to gains in overall employment, the latest estimates from the Bureau Labor Statistics show.
Hiring by nonbank mortgage bankers and brokers rose to 314,300 in May from an upwardly revised 312,400 in
"We were all a little concerned when COVID hit as to what hiring would look like. But when the Fed came in, bought mortgage-backed securities and drove down rates, it created incredible demand," said Bill Cosgrove, president and CEO of Union Home Mortgage, an Ohio-based nonbank that lends in 40 states. "The wild card was we expected home purchases to really suffer. They haven't. We're hiring and growing, and I think most of our competitors are in the same mode."
To date, neither building supply nor consumer demand issues appear to have put excessive constraints on purchase volumes, though both concerns exist to a degree.
The construction industry, for which the BLS records employment with less of a lag than the mortgage business, added just 158,000 jobs in June. The construction industry added 453,000 jobs the previous month.
Some concern remains regarding the broader employment issues associated with the pandemic, which could affect loan performance as well as demand.
However,
Overall employment was up by 4.8 million in June. In May, 2.7 million jobs were added over the course of the month.
The U.S. unemployment rate was 11.1% in June. This represented a decrease compared to higher levels in the last two months, but it’s still a far cry from the pre-pandemic unemployment rate, which was closer to 4%. Overall unemployment in May was 13.3% (or 16.3% when adjusted for
"The degree of misclassification declined considerably in June," the BLS said in a press release.
At most, misclassification may mean that unemployment last month was a percentage point higher than stated, according to the BLS.
While the improvements in overall and industry employment bode well for housing and loan performance in the short term, there is some apprehension about how the unemployment rate and furloughs could affect prospects for the business later.
While 7.5 million people returned to work over the last two months, temporary layoffs persist and number 10.6 million, Mike Fratantoni, chief economist at the Mortgage Bankers Association, noted in a press statement about the jobs numbers.
"The longer they remain out of work, the greater the risk that their situation becomes permanent. We are also continuing to see a very high level of new layoffs, with 1.4 million initial claims for unemployment insurance last week," he said.
Unemployment insurance, which lasts for 26 weeks in many states, has been bolstered by additional benefits in the coronavirus rescue package, but those benefits expire at the end of July.
"MBA continues to believe that Congress needs to extend enhanced unemployment insurance benefits to support those households that remain unemployed," Fratantoni said.
