Mortgage

The variety of non-bank mortgage loans units a brand new report as general employment development slows

Recent mortgage loan non-bank employment figures continued to rise in July, but given signs of general employment weakening in August, this trend may not be sustainable.

The recruitment of lenders and brokers in the home finance business set another record, rising from 387,600, a downwardly revised 387,600 in June to 391,400, according to the Bureau of Labor Statistics.

Meanwhile, the increase in general US employment from 235,000 in August, reported with less delay, was the weakest since January. As a result, unemployment fell from 5.4% to 5.2%. (As in previous months, unemployment was subject to a misclassification error that could easily underestimate the number.) Overall, employment last month was 3.5% below pre-pandemic levels, according to the Mortgage Bankers Association.

What this means for the outlook for non-banks depends in part on how well the home supply and demand imbalance sustains volatile real estate market profits. Construction received a small boost from the hiring of contractors in August.

"Residential rentals remained unchanged during the month as specialist firms added over 17,000 new hires," said Mike Fratantoni, vice president of economic and industry forecasting for the Mortgage Bankers Association, in a press release Friday. "This should continue to support the builders' ability to maintain a higher level of new build."

Industry profit margins, which are above average but showing signs of normalization, can also affect whether bankless mortgage loans continue at the same pace.

According to a report by Moody's Investors Service released Thursday, non-bank mortgage lending and margins could decline to 2018 levels by next year. Moody's estimates that a third of the companies in this category were unprofitable in 2018.

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