Layoffs loom with cooling of U.S. mortgage industry
2003/12/16
NEW YORK, Agencies
With much of the steam out of the refinancing market, the mortgage financing industry is bracing for widespread layoffs.
Two of the biggest home-loan providers ¡X Washington Mutual Inc. and Countrywide Financial Corp. ¡X have cut more than 6,500 jobs in recent months. And lenders are preparing to cut thousands more jobs in the coming months.
In all, some 65,000 people employed at companies specializing in mortgage lending will probably lose their jobs over the next 12 months, says the national Mortgage Bankers Association.
That represents about 15 percent of the peak employment in late summer, when 435,000 workers were processing home loans as borrowers scurried for fear of missing out on historically low mortgage rates. The association's estimate doesn't include jobs at banks that don't have separate mortgage subsidiaries, and there was no breakdown of the data by states.
But there's no question that California in particular has a lot riding in this industry. Data from the state's Employment Development Department show that employment in the two sectors that include mortgage lending and brokerage services jumped 18 percent between 2000 and 2002, to 110,200. And they've kept adding workers this year, even as overall employment has fallen slightly.
Fueling the growth: booming home sales and refinancing activity.
Statewide, the volume of refinancings totaled US$169 billion in the second quarter, up 74 percent from a year earlier, according to the latest figures from DataQuick Information Systems.
Home sales in California are expected to reach a record 574,300 units this year, said the California Association of Realtors.
But the Realtors group is projecting that California home sales will fall 4.5 percent next year, and refinancings already have slid since interest rates started creeping up after hitting a more-than-40-year low of 5.21 percent in June. Last week, the 30-year fixed-rate mortgage averaged 5.88 percent, according to the giant mortgage lender Freddie Mac.
"Over the past two-and-a-half years, a lot of people were hired to handle all of the refi business," said Steve Hops, a board member of the California Mortgage Bankers Association. "Now there's a lot of overcapacity, and the industry can't support it. So there will be some contraction, and we're starting to see that now."
Last week, Seattle-based Washington Mutual, the nation's second-largest mortgage lender, said more than 2,000 home-loan staff members ¡X mostly temporary and contract positions ¡X would be cut, in addition to the 4,500 workers let go since August.
The company said it expected its mortgage volume in the fourth quarter to fall by 50 percent from the third quarter. Reflecting that downturn, Washington Mutual Chief Executive Kerry Killinger reduced earnings estimates for the year to US$4.15 to US$4.25 a share, down from earlier earnings projections of US$4.43.
Calabasas, Calif.-based Countrywide Financial also has been slimming down as refinancings have faded. The company has cut about 2,200 jobs ¡X in loan originations and closing services ¡X since mortgage employment peaked in July at more than 22,000 workers, spokesman Rick Simon said.
Wells Fargo & Co., the nation's largest mortgage lender, declined to comment about its employment plans. "At any given time, we may be reducing staffing levels in one area, but adding in another," the San Francisco-based bank said in a statement.
According to the Mortgage Bankers Association, total mortgage originations are expected to hit a record US$3.4 trillion this year, up 35 percent from a year ago. Refinanced mortgages account for about 60 percent of that total, or more than US$2 trillion.
Next year, the association predicts that the mortgage loan volume will fall by half, to US$1.6 trillion, with refinancings making up only 28 percent of the total."We've never seen a refi boom as dramatic as the one that's coming to a close now, never in the history of the planet," said Charlotte Chamberlain, an analyst with Jeffries & Co., who tracks Countrywide and E-Trade Financial Corp., among other companies.
As was the case with E-Trade, which in August gave pink slips to 163 employees, most of the downsized workers in the industry thus far have been temporary or contract hires. Even if specialty mortgage firms eliminate 15 percent of their staff as projected, employment overall will still be about 370,000 ¡X 50 percent more than their payrolls during the 1993-94 refinancing boom, according to the Mortgage Bankers Association.
chinapost.com.tw |
