Nonbank mortgage payrolls set new record, rise above the 350,000 mark

Unprecedented levels of hiring at nondepositories in the real estate lending and broker business continued in the latest month, according to data from the Bureau of Labor Statistics.

Even with a slight downward revision to September’s numbers, estimated employment in the industry remained incredibly high through at least October as home-loan refinancing continued to surge in response to low rates.

There were 350,100 people on industry payrolls during the month, compared to a revised 339,900 in September and 305,100 in October 2019.

The September surge in broker hiring continued into October, when the total climbed to 106,900 from a downwardly revised 101,100 in September and 87,900 in October of last year.

Whether this level of hiring in the nonbank mortgage industry is sustainable remains to be seen. So far, the rise in lender profits appears to be outpacing employment costs, but there has been a slowdown in broader job growth, which is reported with less of a lag than nonbank mortgage jobs. That, in addition to supply constraints in the housing market and an additional fee applied to some refinances starting in December all suggest there could be limits to the extent to which originations and profits can grow.

“November’s jobs report shows a sharp slowdown in job growth, as total nonfarm payroll employment rose at 245,000 and the unemployment rate fell to 6.7%, underperforming consensus estimates and still leaving a hole deeper than in the worst of the Great Recession,” said First American Deputy Chief Economist Odeta Kushi in a press statement emailed Friday.

The November gain in total employment is down compared to an addition of 638,000 jobs in October and an addition of 261,000 jobs in November of last year. Unemployment was down slightly from 6.9% in October. Due to a classification error, unemployment may have been understated by 0.4 of a percentage point or less in October and November. In November of last year, the unemployment rate was 3.5%.

Despite relatively higher overall unemployment rates, Kushi said it is possible that mortgage jobs could continue to remain immune to the broader distress in the market.

“The only major sector to display immunity to the economic impacts of the coronavirus is the housing market, which has experienced a strong V-shaped recovery,” she said. “This is largely due to the fact this has been a services-driven recession, disproportionally hurting younger, lower wage renters that are less likely to be homeowners or home buyers.”

Although limited housing supply as well as the fee being applied to some refinance loans could be constraints on the mortgage market’s growth, job gains in home construction could indirectly lead to growth in originations.

“Residential building jobs initially rebounded strongly from April’s low point and are continuing the slow increase to pre-pandemic levels. In the most recent report, jobs in residential building increased by nearly 0.2% compared with one month ago, and hovers just 0.7% below its February level,” Kushi said.