August 5, 2021

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Mortgage News

MBA reveals what a slowdown in job growth means for mortgage

April employment numbers were disappointing. After nearly 800,000 new jobs in March, the Bureau of Labor Statistics reported last week that the economy only created around 266,000 jobs in April, so that the unemployment rate remained unchanged at 6.1%. This unexpected slowdown in employment growth was mainly due to declines in manufacturing, retail, transportation, storage and temporary employment. As vaccinations have steadily accelerated, we saw steady growth in the leisure and hospitality sectors through April. The total number of jobs, however, shows that the history of our recovery will be complex, with serious short-term implications Mortgage professionals and borrowers who haven’t got back on their feet.

Joel Kan (pictured), AVP for Economic and Industry Forecasting at the MBA, explained why employment growth has slowed, which means for the general recovery, and for the mortgage industry in particular. He also highlighted what these numbers mean for new housing supplies, how they could affect the delicate problem of indulgence for millions of Americans, and what they mean for the entire housing market.

“We still expect the shopping market to grow in 2021,” said Kan. “The current forecast is for a purchase volume of 1.7 trillion US dollars. A bit of that is the appreciation of the home price … but we’re seeing a pretty spectacular rebound considering how deep things have fallen in early 2020. In general, we see a growth path that will continue. We didn’t get the 1 million jobs everyone was expecting in April, but we got over 200,000. It was just a small step. ”

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Kan said the slowdown in employment growth is not enough for the MBA to revise its estimate of an unemployment rate of around 5.3% by the end of the year. The April slip, he explained, was due in large part to problems in the supply chain as manufacturing and raw materials extraction are struggling to move their business into a recovering economy. As production slowly increases, many companies are suspended from hiring. He also stated that while construction employment remained largely unchanged in April, the housing market is viewing the more than one million single-family homes and more than one million permits issued in 2021 as an indication of some strength in housing construction can should hold every month even without rapid job growth.

While Kan’s predictions of purchase volumes and home starts should be good news for mortgage professionals across the country, the challenges of slower employment growth are still somewhat uncertain. Kan believes the most likely segment to contend with will be first-time buyers FHA-qualifying borrowers. These borrowers, Kan believes, may be more sensitive to these irregularities because they lack the savings or other assets that could keep them stable.

The other glaring area of ​​risk for the mortgage industry is with the 2.2 million homeowners who are still indulgent. With leniency programs and foreclosure moratoriums scheduled to expire in late June, Kan stressed that the mortgage industry should continue to be concerned about this number. He also noticed the higher crime rate from FHA loan as a source of similar concern, although it is stated that crime does not necessarily mean that a loan is lenient or vice versa. While underlying Home equity The growth could be enough to keep this group of homeowners in trouble from creating a foreclosure crisis. Kan noted that mortgage professionals can still take steps to resolve the issues for individual borrowers.

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While Kan continues to have a positive outlook for the real estate market and the wider economy, he stressed that mortgage professionals are now working in an entirely different landscape. He sees the purchase as far more important than the refinancing for the 2021 and 2022 volume. With inventory still tight, Kan believes mortgage professionals need to take steps to reduce turnaround times and close deals for their clients quickly.

“The general economy will affect buyers’ position and their view of the property market,” Kan said. “We expect growth and a better economy in the future, which should continue to help the purchasing market. To the extent that there are houses that people can buy, that will bring a lot of growth. ”