The mortgage industry’s employment level took a big hit in April, while overall U.S. employment data deteriorated in May. But the worsening metrics could actually be a boon for real estate lending.
Mortgage jobs were down by more than 5,000 positions in April, with 239,400 people employed in mortgage lending based on data released Friday by the Bureau of Labor Statistics.
Headcount in real estate finance tumbled from a revised 244,700 reported for March.
The dismal performance for the mortgage sector follows a more than one-third decline in first-quarter residential originations by U.S. lenders.
In April of last year, a revised 260,600 people were working in the sector.
The total for this April included 187,500 people employed in “real estate credit,” lower than 190,500 the prior month. “Mortgage and non-mortgage loan brokers” declined to 51,900 from 54,200.
Across all U.S. nonfarm industries, the number of jobs in May was up 54,000 — though that was far less than analysts had hoped for.
U.S. unemployment increased to 9.1 percent last month from April’s 9.0 percent. May’s rise in the jobless rate wasn’t quite as bad as the 0.20 percentage point increase reported a month earlier.
The disappointing data have already dragged the Dow Jones Industrial Average down more than a hundred points this morning.
As expected, investors are moving their money into the safe haven of Treasury securities — pushing the 10-year Treasury price up 20/32, according to market data from The Wall Street Journal. The yield, which moves in the opposite direction as the price, was 2.96 percent, sinking from 3.07 percent last Friday based on Treasury Department data.
Since mortgage rates tend to follow the benchmark 10-year Treasury yield, the bad employment news effectively brings the 30-year mortgage rate to around 4.5 percent. That puts the 30-year within striking distance of the 4.17 percent record-low reported by Freddie Mac in November 2010.
Such a low rate could be an opportunity for borrowers who missed the boat during last year’s refinance rally. It also could put some prospective borrowers in lower payments than they are paying in rent — posing an opportunity to benefit from the mortgage interest deduction afforded only to homeowners. On top of that, home prices have recently fallen further, making the prospect of ownership even more affordable.
