Mortgage Hiring Ratings Continue To Rise, But Not As Fast As In 2020

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Employment in non-bank mortgage lending institutions increased slightly in April and remained historically high, according to the Bureau of Labor Statistics.

An estimated 386,800 people worked in the states of mortgage bankers and brokers, up from 378,300 in the previous month. The broader number of US jobs reported with less lag shows that 559,000 jobs were added in May, below consensus estimates suggesting more than 600,000 jobs.

The more gradual growth in the number of jobs this year may indicate a slight softening of the market situation, noted by analysts. Until profitability in home lending is still roughly double the historic average since 2008 and has declined over the past two quarters, according to a recent report by the Mortgage Bankers Association.

“Looking ahead, we expect sales profits to decline further in the coming quarters,” analysts from Keefe, Bruyette & Woods Bose George, Thomas McJoint-Griffith and Michael Smith said in a recent report.

With homebuilding showing some gains in the May employment report amid the spring wave of home purchases, it is possible that mortgage rentals could turn out to be stronger when more recent data is released. April estimates for total US jobs were revised upwards by 12,000 on Friday. The total employment figures for March were also revised upward by 15,000. Unusually high refinancing rates until March could also play a role in softening the relative gains seen this spring.

Several indicators suggest that there has been little improvement in the housing market over the past month.

“In May, the number of builders of residential buildings increased by 0.5%. Building houses requires manual labor as a key part of the manufacturing process, so this is a step in the right direction, ”Odeta Kushi, America’s first deputy chief economist, said in a press statement emailed Friday.

However, even with this growth, labor shortages in construction can still limit the extent to which the home buying market can compensate. reduced refinancing seen after the first quarter.

“The number of housing construction jobs, including specialized retail contractors, increased by only 1,900 in May, a slower pace than in previous months and not fast enough to ease supply constraints in the sector.” Fannie Mae chief economist Doug Duncan said in a press statement.

The high cost of building materials, limiting the supply of new homes, is also holding back the entry of mortgages into the home buying market. According to the latest housing market index report released by the National Association of Home Builders and Wells Fargo, the price of materials has risen somewhere between 20-30% over the past 12 months.

The general unemployment rate can also slightly limit home purchases. Unemployment is down 0.3% to 5.8%, but remains elevated from historic lows below 4% before the pandemic. In addition, since March 2020, there has been a classification error that has impacted unemployment rates, and the estimated adjustment for this error in May could be as high as 0.3%.

However, economists as a whole are still forecasting a further decline in unemployment in 2021 due to the rollout of the vaccine and the slow lifting of social distancing restrictions.

“The MBA is sticking to our forecast for a 4.5% unemployment rate by the end of the year,” chief economist Mike Fratantoni said in a press statement Friday.



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