Part 2: ‘Layoffs: The long-term effect of rising mortgage rates’by Tim Manni
Back in mid-June, we published a post about how layoffs in the mortgage industry are an important gauge of the long-term effect of rising mortgage rates.
Even though the rising trend in mortgage rates has petered off a bit as of late, growing layoffs in the mortgage industry have made it rather clear that lenders are preparing for the end of the refinance boom and the shift back to predominantly purchase loans.
Here’s just part of what we wrote back on June 14:
But the true barometer of the long-term impact of rising rates will be layoffs. Eventually, rising rates will force banks to shed positions as there just won’t be enough work to go around.
We’re already seeing signs of this trend forming at banks across the country.
Since the beginning of the summer, layoffs have been announced at some of the nation’s largest lenders:
- JP Morgan Chase
- Bank of America
- Wells Fargo
(It’s important to note that layoffs have also been announced at several other smaller and secondary mortgage institutions.)
“What we’re seeing is a natural outcome of contraction as the market slips and changes to a purchase business,” said Dave Stevens, president of the Mortgage Bankers Association.
Expect more of the same all across the mortgage industry as mortgage rates continue to move higher and refinances dwindle. After all, refinance applications are at their lowest point since July 2011.