(1888PressRelease)
May 05, 2006 -
The parent company of Ameriquest Mortgage has recently decided to fire one third of its employees. This announcement was made by the parent company of Ameriquest ACC. It also involved shutting down of 229 branches.
President of Equity Now a leading New York lending company Michael Moskowitz believes that after one year employment in the mortgage industry will decrease by 20 to 25 %. And this will be driven by the need of increased efficiency and lower production.
Historically low mortgage rates have helped in the rising housing market and supported the growth in the economy. But the market seems to be cooling down with experts predicting that the Federal Reserve may raise the interest rates at least once again.
According to David Olson, co-founder of Wholesale Access in Columbia and Maryland, 40% of the people who are buying homes are mere speculators. He also adds that it’s good for the prices to burst because sooner or later no one will be able to afford a house.
Mortgage Market Slows Down
The Mortgage Banker’s Association (MBA) adjusted the purchase mortgage index to 11.3% this week from a 2 and ½ year low. The MBA took into account half the retail originations and the home sales.
Sales of existing properties moved up in March to an annualized 6.92 million units, whereas new home sales edged up 14% to an annualized 1.213 million units. But there has been a slow down in the prices and a rise in inventories.
The current average borrowing cost of 30 year fixed rate mortgage is 6.57% which is highest since June 2002. Refinancing activity is 84% below its peak which about three years ago.
Olson thinks that most of the small lenders are going out of the industry or are listed for sale and many subprime lenders are struggling.
Many More Jobs to go?
Ameriquest’s retrenchment for the coming 3 months after it decided to pay $325 million to settle regulatory probes into the sales practices, may bode well for other subprime lenders offering high-cost loans to less creditworthy borrowers.
Mike Fratantoni a senior economist of Mortgage Bankers Association expects the origination to decline to $2.4 trillion compared to last years $2.8 trillion and $4 trillion a year before that. He said “We have moved form a refinancing boom to a market which is more focused home sales, which is more labor intensive” And he think this to be the prime reason for the fall in the employment in mortgage industry.
Leading companies of the industry like Equity Now which has more than 40 employees has made its business completely electronic to make it more efficient.
Moskowitz said “From a mortgage banker's point of view like mine, I'm being squeezed when I offer a mortgage, and then squeezed when I try to sell it.”
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