Mortgage Refinance Surge causes Surge in Lending Jobs

Job creation in the mortgage industry looks promising as a major industry association predicts growth in mortgage originations this year.

A tsunami of refinancing demand is rolling onshore, and it might be bringing some relief to the unemployment situation, as well. As more homeowners try to push their mortgage rate below 5 percent with a refinance, mortgage lenders are finding that they don't have the manpower to service the new business.

The federal government's efforts to reduce mortgage rates are working, and they're stoking the mortgage job picture to boot. With conforming mortgage rates fluctuating below 5 percent, homeowners are eager to trade in their 6 and 7 percent loans for a cheaper monthly payment. According to the Mortgage Bankers Association's (MBA's) Refinance Index, mortgage refinance activity was hot through most of March and April. The index showed a marked decline of 21.9 percent in the week ending April 29, but this followed several weeks of increases. MBA has predicted that this year's total mortgage refinance activity will rise to $1.13 trillion, up from $765 billion in 2008.

Change of heart at GMAC ResCap

This rush of refinance activity is starting to open up jobs in the mortgage sector once more. In mid-April, for example, GMAC ResCap announced its plans to hire 100 to 150 people at its Fort Washington, Penn. office. A company spokeswoman indicated that most of those jobs would be in originations to handle the rising demand for mortgage refinances. In 2008, GMAC ResCap eliminated nearly 170 jobs in an effort to reduce its mortgage origination activity.

MBA Chief Economist and Senior Vice President of Research and Economics, Jay Brinkmann, has implied that other mortgage companies may have to follow suit. In a press release, the executive cited several reasons why the projected 2009 origination activity "will test the operational capacity of a number of mortgage banking firms."

By the numbers

MortgageDaily.com estimates that mortgage companies hired 8,877 people in the first quarter of this year. Unfortunately, those new jobs were more than offset by an estimated 10,628 layoffs, creating a net decline of 1,751 jobs. While that seems like bad news, it actually represents a strong improvement from prior quarters. The industry's net loss was 7,721 jobs in the fourth quarter, and 36,737 net jobs throughout 2008. In 2007, the net job decline totaled 10,233 in the fourth quarter, and 87,131 for the year. MortgageDaily.com Publisher Sam Garcia also cited strong refinance demand as a contributing factor for the improving unemployment picture in the mortgage sector.

Nationwide unemployment across all sectors has risen steadily from 4.5 percent in mid-2007 to the current level of 8.5 percent. The latest report by the Bureau of Labor Statistics estimates the number of U.S. unemployed workers at 13.2 million.

The Feds have implemented a variety of housing-related programs to stimulate demand for mortgages and home purchases. It's too early to tell if the programs are impacting home sales.  Most people hope the uptick in refinancing activity points to a changing tide in housing.