Nonbank Mortgage Hiring Soars Ahead of Home Buying Season

Increased loan production during the spring home buying season had nonbank mortgage lenders stepping up their hiring in April.

Employment at independent mortgage banking and brokerage firms jumped by 2,900 jobs in April, and hiring in March was revised upward by 700 full-time employees, the Bureau of Labor Statistics reported Friday.

Overall, employment in the nonbank mortgage and brokerage sector rose to 301,400 in April, from 298,500 in March. A year ago, that figure stood at 287,900 following annual adjustments to 2015 totals made earlier this year.

"With the higher production, there has been a push to hire more loan officers," said Joel Kan, an associate vice president for industry surveys and forecasts at the Mortgage Bankers Association.

"The loan officer workforce has been getting older," Kan said in an interview Thursday. And there is more competition to hire and retain young LOs.

Meanwhile, purchase mortgage activity is "definitely healthier than it has been in the last year or two," Kan said. "We have seen it 10% to 15% higher than last year in April and May."

Economists at Wells Fargo Securities are expecting 2016 will be a "break-out year" for new home sales. They estimate new home sales will hit 810,000 this year, up nearly 12% from 2015, according to a WFS June 1 report.

However, builders are struggling to keep up with demand. "Sales of new homes where construction has not yet started rose to a cycle-high of 209,000 in April, and are up 31% over the past year. The pickup reflects the exceptionally low inventory of completed new homes available for sale," the WFS report says.

The WFS report also expects more millennials will be moving to the suburbs this year which would boost home sales. "We continue to believe 2016 will be the year that the affordability mitigation to the suburbs and the lower-cost housing markets will make its return."

Meanwhile, the BLS reported Friday that the U.S. economy created just 38,000 jobs in May, which is much lower than expected despite a strike by nearly 34,000 Verizon communication workers. There is a one-month lag in BLS reporting of mortgage industry jobs data.

Ironically, the unemployment rate fell to 4.7% in May from 5% in April. BLS also revised down its April jobs report to 123,000 new hires from 160,000 as originally reported last month.

"This was an unqualified dud of a jobs report with the weakest month of job gains since 2010," said National Association of Federal Credit Unions chief economist Curt Long.

"The unemployment rate fell, but for the wrong reason as labor force participation declined for the second consecutive month. As for the Fed, this likely puts an end to the hopes of a rate hike in June, and will probably shift market expectations to September," he said in a statement issued Friday.

Scott Anderson at Bank of the West also expects the Fed will delay a rate hike. The unemployment rate dropped to 4.7%, which is the "lowest level since November 2007, but that was due to a drop in the labor force and not really good news. The U.S. labor force contracted by 458,000 in May, and the labor force participation rate slipped two-tenths to 62.6%," Anderson said in a June 3 statement.

"We are pushing out our forecast for the next rate hike from the Fed to the September FOMC meeting from July. The Fed will likely need to see a convincing rebound in job growth in the next few months to give the green light to move again," Anderson said.