If you have a job that involves building homes, buying homes, selling homes or that is in any way related to the mortgage industry, you might want to start searching for alternate employment. Seriously. Interest rates are starting to rise dramatically, and mortgage lenders such as Bank of America (NYSE:BAC), Wells Fargo (NYSE:WFC) and JPMorgan Chase (NYSE:JPM) are all cutting thousands of mortgage-related jobs. Last week, mortgage refinance activity plunged to the lowest level that we have seen since June 2009 and total mortgage activity dropped to the lowest level since October 2008. Unfortunately, this is only the beginning. Mortgage rates closely mirror the yield on 10 year U.S. Treasuries, the the yield on 10 year U.S. Treasuries has nearly doubled since early May. But it is still only sitting at about 3 percent right now. As I have written about previously, it has a ton of room to go up before it hits “normal” historical levels, and so do mortgage rates. As I noted the other day, some analysts believe that the yield on 10 year U.S. Treasuries is going to hit 7 percent eventually. If that happens, mortgage rates will be more than double what they are today. And we have already seen the average rate on a 30 year fixed rate mortgage go from 3.35 percent in May to 4.57 percent last week. If interest rates continue to rise we could be heading for a “housing Armageddon” that will make the last housing crash look like a Sunday picnic.
The mini-housing bubble that we have been enjoying for the last couple of years is coming to an abrupt end. It doesn’t matter what the mainstream media is telling you about a “sustainable” housing recovery. Just look at how the big mortgage lenders are behaving. They know the gig is up. According to Bloomberg, Bank of America has just announced that they will be eliminating 2,100 mortgage-related jobs…
Bank of America Corp. (NYSE:BAC), the second-largest U.S. lender, will eliminate about 2,100 jobs and shutter 16 mortgage offices as rising interest rates weaken loan demand, said two people with direct knowledge of the plans.
Would they be doing that if we were really heading into a “sustainable housing recovery”?
Mortgage lenders are paring staff as higher interest rates discourage refinancing and cast doubt on how long the housing market rebound will last. Wells Fargo & Co., (NYSE:WFC) the biggest U.S. home lender, plans more than 2,300 job cuts, and JPMorgan Chase & Co. may dismiss 15,000.
Would they be doing this if they thought that brighter days were ahead?
Of course not.
In fact, Well Fargo just announced that it expects to make 30 percent fewer home loans this quarter because of rapidly rising interest rates.
It’s over folks.
The mini-housing bubble that the mainstream media has been hyping so much is over.(...)Click here to continue reading the original ETFDailyNews.com article: Higher Interest Rates Are Disrupting The Job MarketYou are viewing an abbreviated republication of ETF Daily News content. You can find full ETF Daily News articles on (www.etfdailynews.com)
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Press Release Service provided by PRConnect.
Stock quotes supplied by Telekurs USA
Postage Rates Bots go here