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Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

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Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#11

Post by Exmoor »

bpodgursky wrote: post #9
blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

Does this assume 20% down? The higher the cash component on average, the less it matters. If it's a cash market (bay/Seattle/NYC), might be more resilient.

Cash buyers are not complete idiots. If the mortgage-based buyers they were competing with a year ago have 35% less buying power than why would they spend money they don't need to? The market where I live (Seattle suburbs) has completely reversed in the last year.

A year ago I was surprised if a house lasted more than a weekend, now I'm literally shocked when I see a house sell. I can think of two houses in my area I've seen with sold signs in the last couple months and there's dozens that have been sitting on the market for that time.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#12

Post by larrymyers »

blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

There's been a lot of news coverage lately about how low inventory is going to continue to keep housing prices high, despite mortgages going up.

Basically people with 2%-3% mortgages are going to sit tight, because they can no longer afford a comparable house were they to move. Low inventory means prices won't drop as much as people hope with rising interest rates.

The only wild card here is what will happen with cash buyers, who aren't affected by mortgage rates.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#13

Post by toomuchtodo »

sgc wrote: post #8
toomuchtodo wrote: post #6

Earlier quoted context omitted.

Not OP. Fed stops raising the benchmark rate. Until it plateaus, asset prices have room to fall. Days listed is a great indicator of mispriced real estate (higher # = asking too much). Those needing to sell will drive declining comps. Rates are expected to peak at 4.5% to 4.75% in 2023, according to the Fed’s own projections (and might go as high as 5%).

Rents have gone up, and people have locked in historically low interest rates. Very few people actually have to sell, and outside of limited life situations, many will just shift to renting. That is why it is taking so long for prices to drop, and why they very well might never drop enough to match previous affordability before we hit a period of declining rates. If only 10% of owners on the market are actually feeli…

We can speculate, but will have to see what job losses look like over the next 12-18 months, Boomers (10k per day retire) trying to downsize or tap their equity to support themselves in retirement, etc before boldly proclaiming sales with seize up as rates climb. Life happens, some people will need to sell, even if that means losing their sweet 2-3% rate. Cash buyers know what these assets are worth at these interest rates, it’s unlikely they’re going to Wile E Coyote over the cliff because mortgage buyers stopped at the edge.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#16

Post by jmyeet »

It's unsurprising mortgage volume is down given economic uncertainty and the spiking interest rates. As such, layoffs at mortgage originators seem inevitable.

But here's the lesson I want people to take from this: both Demorats and Republicans are cut from the same neoliberal cloth in that they both serve corporate interests. What do I mean by this? Neither pushes back on the idea that interest rates are the only way to tackle inflation.

This is false.

As we say in the GFC and the pandemic, wha tdo companies do with this money? They pay bonuses, do layoffs anyway (to cut costs) and give money to shareholders, primarily in the form of buybacks.

But what you see is corporate profits are skyrocketing. Inflation is being as an argument to raise prices, which in turns puts pressure on inflation, and all that money goes to the shareholders.

Higher interest rates increase housing costs and put upward pressure on rents (as landlords seek to recoup costs).

The other method by which this can be tackled is with taxation. Some countries have enacted windfall taxes. Taxation incentivizes investment in the business.

Yet there is no serious political will anywhere to be found for this in the US.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#17

Post by pcurve »

blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

Another way of looking at it... if you are taking out a $650,000 30 year 3% fixed loan, it is $2,740/month

At the current rate of 7.5%, it's $4,545.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#19

Post by friedman23 »

sgc wrote: post #8
toomuchtodo wrote: post #6

Earlier quoted context omitted.

Not OP. Fed stops raising the benchmark rate. Until it plateaus, asset prices have room to fall. Days listed is a great indicator of mispriced real estate (higher # = asking too much). Those needing to sell will drive declining comps. Rates are expected to peak at 4.5% to 4.75% in 2023, according to the Fed’s own projections (and might go as high as 5%).

Rents have gone up, and people have locked in historically low interest rates. Very few people actually have to sell, and outside of limited life situations, many will just shift to renting. That is why it is taking so long for prices to drop, and why they very well might never drop enough to match previous affordability before we hit a period of declining rates. If only 10% of owners on the market are actually feeli…

All those people that retired with their nice homes because of historically high asset prices that lost close to 50% of their net worth in the past year or two might need to consider downsizing. Especially once property taxes on their newly inflated home values kick in.

Re: Wells Fargo mortgage staff brace for layoffs as U.S. loan volumes collapse

#20

Post by vinyl7 »

larrymyers wrote: post #12
blindriver wrote: post #7

So far the mortgage rates skyrocketing corresponds to an equivalent mortgage that is about 35% lower. Meaning that if you could previously afford a $1 million mortgage, you can now only afford about a $650,000 mortgage with the same payment. If you don't see a corresponding price drop of 35% then it might be too early.

There's been a lot of news coverage lately about how low inventory is going to continue to keep housing prices high, despite mortgages going up. Basically people with 2%-3% mortgages are going to sit tight, because they can no longer afford a comparable house were they to move. Low inventory means prices won't drop as much as people hope with rising interest rates. The only wild card here is what will happen with cas…

Inventory is already well on its way back to 2020 levels, and is exceeding 2019 levels in some areas. The "shortage" was caused by demand from extremely low interest rates, now that demand has died...the shortage is over. Not to mention, as we head into this recession and life/layoffs continue, people will be forced to sell if they can no longer cover their mortgage.

https://twitter.com/RickPalaciosJr/status/158868887009456128...

https://twitter.com/NewsLambert/status/1589036074441281536

https://twitter.com/NewsLambert/status/1589034547697836032

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