Employment at nonbank mortgage lenders collapsed by 37% this time around, to the lowest level since 1997.
By Wolf Richter for WOLF STREET.
Housing bubbles create employment bubbles at mortgage lenders, and housing busts then cause the employment bubble at mortgage lenders to implode. From June 2021 through October 2024, employment at nonbank mortgage lenders plunged 35.8%, according to the latest data from the Bureau of Labor Statistics.
At the low-point in June, employment at nonbank mortgage lenders was down by 37% from the peak, having plunged from 292,700 employees in June 2021 to 183,100 employees in June 2024, the lowest since 1997, lower even than during Housing Bust 1.
The employment bubble of Housing Bust 1 was even bigger than the employment bubble in Housing Bubble 2, largely because over those nearly two decades, a lot of tasks in mortgage lending have been automated, digitized, and moved online, requiring less human work today, and a relatively smaller workforce.
Employment at banks’ mortgage lending divisions is not included here – just nonbanks. But mortgage-related employment at banks took a similar turn.
Nonbank mortgage lenders dominate mortgage lending, while banks have pulled back. The two largest mortgage lenders – Rocket Mortgage and United Wholesale Mortgage – combined originated more mortgage volume in 2023 ($179 billion) than the next eight largest mortgage lenders (banks, nonbanks, and credit unions) combined ($171 billion), according to Experian:
| Top 10 Mortgage Lenders by Origination in 2023 | |||
| Mortgage lender | # of Mortgages | Billion $ | |
| 1 | Rocket Mortgage | 288,558 | 76.3 |
| 2 | United Wholesale Mortgage | 274,667 | 102.9 |
| 3 | Bank of America | 89,329 | 27.0 |
| 4 | Fairway Independent Mortgage | 82,985 | 26.0 |
| 5 | CrossCountry Mortgage | 77,790 | 27.9 |
| 6 | Navy Federal Credit Union | 70,371 | 14.7 |
| 7 | U.S. Bank | 69,655 | 24.4 |
| 8 | Citizens Bank | 66,687 | 15.4 |
| 9 | PNC Bank | 65,984 | 14.7 |
| 10 | LoanDepot | 62,665 | 20.7 |
| Total | 350.0 | ||
| #1 & #2 as % of total | 51% | ||
Mortgage brokers have seen similar job destruction after the housing bubbles burst. Employment at mortgage brokers and nonmortgage loan brokers plunged by 32% from June 2021 through October 2024 (and by 33.6% through the low in June 2024). During Housing Bust 1, employment in this sector collapsed by 57%:
These are different ways of depicting housing bubbles and housing busts – in terms of employment in the mortgage industry.
All combined, nonbank mortgage lenders and mortgage & nonmortgage loan brokers, lost 150,200 employees between June 2021 and June 2024, or 36% of their total staff.
Thankfully, employment in the mortgage sector is relatively small compared to the vast US labor market, and that kind of collapse in employment is barely a squiggle in the overall numbers.
Employment plunged because mortgage originations plunged. We can see that in mortgage applications to purchase a home and applications to refinance an existing mortgage.
Refinance mortgage applications are down by 70% from the same period in 2019, and by 81% from the same period in 2022, according to the weekly Refinance Index by the Mortgage Bankers Association.
Note how in 2018, refinance activity also dropped as mortgage rates approached 5% in November 2018. And when mortgage rates started falling in 2019, refinance activity surged again.
But the historic refinance bubble occurred during the Fed’s 0% era of 2020 and 2021, when mortgage rates fell below 3%, and everyone and their dog refinanced their mortgage:
Mortgage applications to purchase a home are down by 40% from the same period in 2019, and by 48% from the same week in 2021, according to the weekly Purchase Index by the MBA. This is a stunning collapse of activity.
By comparison, sales of existing homes dropped by 35% in 2024 from 2021, to about 4 million homes, the lowest since 1995.
Housing bubbles are just so much fun, and everyone in the industry makes money, but the inevitable housing busts are a mess.
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Tell that to the sellers of the two vacation houses on which we made we thought generous all cash offers over the last two months, given the houses that are sitting empty with list prices going down, down, down. They are determined I guess to wait us out. But we are seeing lots of choices. And we were and still are very conflicted about spending our money in this market anyway. So, instead, we are bumping up the money market and enjoyed visiting then leaving a nearby air bnb with no lingering responsibilities. That was really nice, actually.
Transactions are down, but aggressive RE agents selling a few $1M houses/ year, on 2%/3% commissions, before expenses, are earning a good income during the slump.