Trust mortgage lenders to see opportunity in a global epidemic.
A drop in interest rates following the coronavirus outbreak is hastening a hiring spree across the mortgage industry, with some of the nation’s biggest lenders anticipating a bumper year of refinancings and new home loans.
Monday was the busiest day for mortgage applications in the 35-year history of Quicken Loans, CEO Jay Farner told Bloomberg. The frenzy for loans is setting off a war for talent, as lenders look to poach underwriters who can handle the incoming deal frenzy.
“If you’re not making $1 million this year as a loan officer, you’re grossly incompetent,” Gold Star Mortgage Financial’s Eric Mitchell told the publication. “‘I tell them, ‘We’re not working 40 hours a week, kiss your families goodbye.’” JPMorgan Chase is internally reshuffling its team, transferring many staffers from the home-equity department to mortgages to help satisfy the demand, the bank said in an internal memo viewed by Bloomberg.
In response to the rapidly spreading virus, the Federal Reserve slashed its benchmark rate by half a point Tuesday, its first such emergency since the housing market collapse of 2008. The Fed noted that while the U.S. economy remains strong, “the coronavirus poses evolving risks to economic activity.” The cut will reduce rates to 1.0-1.25 percent.
Average 30-year mortgage rates will drop below 3.25 percent and likely remain there for 2020, Mike Patterson of Freedom Mortgage Corp told Bloomberg. Investors have been brainstorming on how to price a Ginnie Mae 30-year fixed-rate mortgage security that would yield just 2 percent, Patterson added.
Real estate companies have taken a hit from fears of the coronavirus. Last week, a measure of real estate stocks called the SNL U.S. REIT Equity index fell about 12.3 percent, according to S&P. [Bloomberg] — TRD Staff