Housing Recovery Update: Banks Hiring Employees to Increase Lending
Though the economic indicators -- new-home sales plummeting to a record low, wobbling home prices and high unemployment-- don't necessarily signal that the current climate is going to change any time soon, some banks believe a turnaround is the lending sector is looming.
And to prove it, a few lenders are bringing on hundreds of new mortgage officers. JP Morgan Chase, the second-biggest U.S. bank by assets, is in the process of hiring 1,200 mortgage officers.
And others are showing it on the books, too.
Providence, R.I.-based Citizens Bank, which operates out of a dozen states, saw its lending increase 167 percent in 2009 over the previous year. In 2010, the bank is adding more than a 100 loan originators, with plans to up this number of new employees in their lending office to 400 by 2013.
But one economist is chiming in that this increase in staff may becoming a little too early.
"It's pretty premature," said Mark Dotzour, chief economist at Texas A&M's Real Estate Center. "They are doing some long-range planning, with the emphasis on 'long.' "
In fact, forecasts don't expect mortgage lending to pick up in the next couple of years, as the low levels of refinancings are hampering overall growth.
According to the Mortgage Bankers Association, the home loan market should grow over the next two years to $916 billion from an estimated $725 billion this year, while refinancings should dive from $717 billion this year to $474 billion in 2012.
Jay Brinkmann, chief economist at the Mortgage Bankers Association, is even taking a more pessimistic stance -- that banks will service fewer mortgages in 2010 than last year.
What's not adding up here?
The banks could be hiring because: a) lenders are jumping the gun and taking a chance that the economy will rebound swiftly; b) they're privvy to knowledge that industry insiders are overlooking; or c) adding a thousand employees is business as usual.
Thankfully, the odds seem slightly better on the first two.
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