Why are U.S. banks back peddling and laying off more mortgage department employees? More importantly, what sort of ramifications will mortgage department layoffs have on the real estate industry?
According to headlines from American Banker and Bloomberg, U.S. banks are making significant mortgage department layoffs. This includes over 400 Bank of America staff in Dallas alone, as well as 2,300 Wells Fargo employees.
After recent hiring sprees, why would the banks do this? What does it imply for real estate investing in America?
Some think that rising interest rates are behind the recent mortgage department layoffs. However, experienced real estate investing veterans know that the banks actually make more money when rates are up. Most mortgage lenders are actually forecasting a continued increase in loan volume ahead.
With the exception of some extremely hard hit, low income and foreclosure areas, U.S. banks actually seem to be on a real estate investing spree themselves. Banks appear to be building new branches at an alarming rate. While some might find this perplexing, given the recent roller coaster ride real estate has been through, investors ought to be emboldened by this bullishness. After all; if those controlling the markets are betting big on property, maybe everyone should.
While mortgage department layoffs can be tough for the individuals being forced out, they should find plenty of employment opportunities in the real estate industry. For real estate investing, it’s not bad news at all. Fewer defaults mean a stronger market. Leaner and more profitable banks mean more cash to loan, with cheaper borrowing costs on their way.