Mortgage Origination Tanks

Share on Facebook0Tweet about this on TwitterPin on Pinterest0Share on LinkedIn0Digg thisEmail this to someone

By Octavio Nuiry

For the last few years, mortgage origination and refinancing has been the dominant revenue stream for the TBTF banks.

But now the go-go years may be over.

The banking sector is reeling with layoffs due to a falloff in mortgage origination and refinancing activity.In September the Mortgage Bankers Association noted a 70 percent decline in loan refinancing and 15 percent falloff of purchase loan origination. Although the MBA reported an uptick in origination and refinancing since then, the overall trend is downward — and the banks know it.

This has triggered a wave of more than 7,000 layoffs in the U.S. banking sector this year, reports The Wall Street Journal. Citigroup has laid off 1,000 workers. Wells Fargo, which originates one out of three mortgages in the U.S., has slashed 4,000 mortgage jobs in recent months, while Bank of America will cut about 2,100 servicing jobs, according to American Banker.

Recent spikes in interest rates have damaged the home-lending business. Moreover, declining affordability, a stagnant job market and flat consumer income are also fueling a decrease in loan origination. Add to these woes a real estate market plagued by Wall Street participation, government intervention and an industry reeling from onerous legislation and regulation, and the future of home-lending is anything but certain.

Banks started getting jittery about the loan origination market when the Federal Reserve hinted on September 18 that the central banking system might wind down their quantitative easing policy. Just the mention that the Fed planned to “taper” its bond buying policy led to a swift and steep spike in interest rates over the last few months.

The rate on the benchmark 10-year Treasury went from 2 percent at the end of May up to nearly 3 percent in September, according to the U.S. Treasury. Mortgage rates have similarly shot through the roof, causing applications to refinance existing home loans to plummet 70 percent since their peak in May. A 30-year fixed rate mortgage was 4.32 percent for the week of Sept. 26, up from a year ago when it was 3.40 percent, according to Freddie Mac.

Related News
Preparing for a World Without Record-Low Interest Rates
RealtyTrac: Homeowner Equity on the Rebound
Why The FHA Should Be Opened To Investors

Share on Facebook0Tweet about this on TwitterPin on Pinterest0Share on LinkedIn0Digg thisEmail this to someone
About the author

Octavio Nuiry

Born in Havana, Cuba, raised in Miami, Fla., and New Orleans, La., Octavio has spent his entire career in the communications industry. Prior to joining RealtyTrac, Octavio worked as a columnist for the New Orleans Times-Picayune, a publicist at Burson-Marsteller in Los Angeles, an account executive at various Orange County advertising agencies and the owner of his own marketing firm, ON Marketing.

More articles by

No Responses

Leave A Response

Your email address will not be published. Required fields are marked *

Connect With Us

Recent Posts

Technology Topic Tips

The goal of this kind of essay writing, as the particular title indicates, will be to give advice to the visitors. It’s an established approach to create an informal and friendly dash to your own… read more

How-to put up

This program comprises interviews with pupils. At current, there are just two free creating classes. These students are likely to understand a number of composing forms like books, stories, poetry, memoirs, and literary essays. This… read more

How to Make a Trash Bag Poncho

Composing an essay to numerous pupils isn’t just a tough project however a chilling one as properly. To enrich your essays that h AS changed. Take a look at this fully free composition instance. To… read more

Did the 47 GOP Senators commit treason, violate the Logan Work with Iran notification

Follow these hints himework you are going to obtain an excellent samples of positive and negative faculty essays. Ask them to draw an image or collection to really move with their article. Online documents are… read more

How-to Boost Your Work-Related Publishing

Custom article composing in our company is normally completed by specialist authors within the specific area research that have huge skills in study and composing. Writing a term paper is really not a straightforward undertaking…. read more