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Mortgage Refinancing > Mortgage Refinancing Is Down Time To Cut Staffing For Lenders
Mortgage Refinancing Is Down Time To Cut Staffing For Lenders |
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Times are not very favorable for
mortgage refinancing lenders as the
number of people seeking mortgages has drastically reduced this year by as much as 50% from last year. Mortgage rates are at 5 1/2%, up from 5% of mid-2003 but still the lowest in the last 40 years. This has brought
down the mortgage refinancing activity to its lowest ebb and the mortgage
refinancing lenders are having no other option but to reduce their staff and some of them are even closing down. A year ago, mortgage refinancing made up about 75% of mortgages by local lenders, while loans for home purchases made up 25%. Today, these percentages are reversed and the number of mortgages paid off was down 45% from 2003. As a result, local lenders have had to reduce their staff by up to 25%. As such those financing home purchases have a limited market now. Shannon Forsyth, who heads the Southern Colorado Chapter of the Colorado Mortgage Lenders Association and who is also vice president of mortgage banking for Air Academy Federal Credit Union says, "We've seen numerous layoffs in the last 12 months because of the decline in the number of loans being made, but most mortgage refinancing lenders are finding a way to stay in business." In the six months ending in February, about 370 employees lost their jobs at banks, credit unions and other lenders in El Paso County and another 500 people have lost their jobs in the overall financial industry. As an example, Jay Garten, president of the Springsbased affiliate of Peoples National Banks said that Peoples Mortgage Corp., one of the county's largest mortgage refinancing lenders reduced its 39 employees by 5 positions, all but one by attrition. Many mortgage lenders have had to close down, whereas others have had to reduce their staff to survive. In the Colorado Springs area, there were more than 1000 lenders a year ago but now there are only about 650 businesses that offer mortgage refinancing, according to a search of online listings by telephone directory publisher Dex Media Inc. Warren Meacham, vice president of Auer Colorado Online Mortgage, said, "There are absolutely too many mortgage companies for the demand, so I expect some will close. The demand exceeded supply during the mortgage refinancing boom, but we are back to a normal market now." Meacham further opined that as interest rates are increasing, the housing market is slowing down and mortgage activity will further decline next year. However, housing construction and existing home sales are at near-record levels this year, locally. Mortgage lending this year is expected to slide to $2.67 trillion, down 30% from last year's record total and a further fall of 20% is forecast for next year. Thousands of jobs are expected to be slashed nationwide by the financial giants Bank of America, Capital One, Citigroup and Washington Mutual Inc., mainly because of a downturn in mortgage refinancing activity. Wayne Bland, president of Springs-based Intermountain Mortgage Co. remarked, "People who were in business just to take advantage of the refinancing boom are getting out. Some who were doing mortgages on the side have found other ways to supplement their income." However, all lenders are not resorting to job-cuts as experts say that rates are rising but in a mild and gradual manner. Mortgage giant Countrywide Financial Corp. said it has added nine employees in the past six months, and Bland said he recently hired four loan officers who left other mortgage refinancing firms. Bland said, "There is some consolidation going on in the business. This has allowed us to add some seasoned producers that will bring business to us." New types of loans are being offered by mortgage lenders, such as mortgages for which borrowers make only interest payments. This will lower the monthly payment and allow borrowers to qualify for bigger mortgages. A 40-year mortgage will be offered by Air Academy early next year that will lower monthly payments for borrowers. |
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