Just a couple of years ago, the nation’s largest financial companies were slashing employees from their mortgage divisions. Rising interest rates and a general fear of the housing market resulted in a large drop in mortgage applications.
This is no longer the case.
What we have seen over the past year is the housing market rebounding nicely, as the market is perfect for new homebuyers and current homeowners looking to refinance.
The Federal Reserve is keeping interest rates near historic lows, President Obama has eased lending restrictions, and consumers are gaining confidence in the overall housing market, especially considering that home prices have now risen for 12 straight months.
What banks are seeing is that they are having a hard time keeping up with mortgage and refinance applications, and are beefing up staff in their mortgage units.
Wells Fargo (WFC) has already added 2,500 underwriters this year, and plans to hire an additional 1,000 employees. JP Morgan (JPM) has increased its mortgage operations by 50% this year.
With the housing market continuing to improve, all five of the nation’s largest banks reported a record $8.35 billion in income from mortgage banking last quarter.
The housing market still has a long way to go, but every day we seem to get more positive news about its recovery.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors.