Layoffs at local mortgage lender highlight changing housing market

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STRONGSVILLE, Ohio – Strongsville-based Union Home Mortgage announced an undetermined number of layoffs this week, joining the list of other major mortgage lenders in recent days that have cut staff amid falling new loan application volumes. mortgages and refinancing.

Cindy Flynn, director of marketing and communications at Union Home Mortgage, said the company is “temporarily adjusting [its] staffing levels” in the midst of a rapidly changing residential housing market, which is largely due to a historically low number of homes for sale, inflation as well as rising interest rates . It is unclear how many staff members have been made redundant; the company has not filed a WARN notice with the Ohio Department of Employment and Family Services.

“Like other companies in our industry, “Union Home Mortgage is temporarily adjusting its workforce to adapt to rapidly changing market conditions and business needs,” Flynn said in a statement. “We remain confident that we will continue to be one of the fastest growing independent mortgage banks. nationwide lenders and offering a world-class culture and the highest quality of customer service.

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The layoffs at the fast-growing mortgage lender follow similar job cuts this week at other major lenders, including Rocket Mortgage and Wells Fargo. However, industry experts said the job losses are not terribly surprising, given the monumental increase over the past two years in the number of people working for mortgage lenders.

According to the Bureau of Labor Statistics, total employment in the lending industry has increased more than 60% since July 2019, from 84,000 total workers nationwide to more than 137,000. The hiring spree , experts say, was in response to the white-hot housing market that followed the initial lockdowns during the COVID-19 pandemic.

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Source: Bureau of Labor Statistics

However, with the Federal Reserve raising interest rates earlier this year and further rate increases expected throughout 2022, demand for new mortgages as well as chronically low inventories in the housing market have dropped precipitously.

“The spike in mortgage rates over the past month, as the Fed has sought to rein in inflation, has really frozen activity in the housing market,” said Michael Goldberg, associate professor and executive director of the Veale Institute. for Entrepreneurship from Case Western Reserve University. “It’s slowed down new buying activity. It’s slowed down refinancing and as a result the biggest mortgage lenders are responding by laying off staff.

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Coinciding with the interest rate hikes has been a significant drop in mortgage refinance applications which have nearly halved in the past six months, according to the Mortgage Banker’s Association.

According to research from Realtor.com, the impact of interest rate hikes is only beginning to be felt in the housing market.

“The combination of more sellers offering homes for sale and fewer buyers able to afford today’s high costs will lead to growth in the number of homes on the market in the months to come,” said Danielle Hale, chief economist at Realtor.com. . “This reality should help keep price growth in check, as more options and fewer competitors allow buyers to be more selective. Sellers who want to attract as many buyers as possible for their home would be well served to register as soon as possible. Buyers who can still afford to keep shopping should reassess their target search price to ensure it has been adjusted to account for the budget impact of today’s much higher mortgage rates.

The transitional state of the housing market comes as consumers grapple with inflation levels at a 40-year high. Inflation, coupled with higher borrowing costs for new home purchases and credit card debt, will likely leave consumers with a noticeable decline in purchasing power.

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As for the employees affected by the layoffs at Union Home Mortgage, Goldberg said those seeking new employment are still at an advantage given the tight job market.

“It’s still a very bubbly job market and there are a lot of opportunities. It could be different from not necessarily walking down the street from one mortgage company to another; it could be a different industry,” Goldberg said. “It could be outside of Cleveland, but maybe stay here in northeast Ohio and do it remotely. Many of us have been through these downturns and upswings, but it has been a very difficult – and confusing for many people – two years. »

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