Pressure is mounting at the mortgage banking divisions of the biggest US banks.
As refinancing activity has plummeted, banks are trying to step up their new home loan books, in an attempt to offset the dramatic revenue drag on overall bank earnings. There are few easy ways to boost new purchase originations, but one of the starkest battles is playing out in the bidding war for hotshot mortgage loan officers.
“People are fighting over a smaller pie,” said Franklin Codel, head of mortgage production at Wells Fargo, the biggest US home lender. “The competition for quality loan officers is very high.”
Up to now, the focus has been on thousands of job cuts in the mortgage divisions of US banks – many of which came in the refinancing call centres as higher interest rates deterred borrowers from refinancing their mortgages.
But as credit quality improves the banks have begun vying for a slice of the new purchase market and have started an intense competition for experienced mortgage bankers with existing client relationships.
The role of government-backed entities such as Fannie Mae and Freddie Mac means that US banks tend to offer similar mortgage products so it is harder for them to stand out in this area than in credit cards, where their benefits packages differ.