Declining Mortgage Market Triggers More Credit Union Layoffs

The $1.5 billion Collins Community Credit Union in Cedar Rapids, Iowa laid off 38 employees on Oct. 6 because of declining consumer demand for mortgage loans and refinancing.

“In the financial sector, industry market trends have changed, and while some services are growing, others are slowing,” Collins Community Vice President of Corporate Strategy and Marketing Mai-Linh Hoang said. “For Collins Community Credit Union, this has resulted in an internal restructuring, which included the elimination of some current positions.”

Most of the layoffs occurred in the credit union’s mortgage division.

“We have taken a very deliberate approach to provide resources to affected individuals with a separation package and finding new employment opportunities,” she said. “We thank them for providing excellent service to our members over the years.”

Before the layoffs were announced, Collins Community had 319 full-time and six part-time employees, according to its second quarter NCUA Call Report.

“Iowa tends to be a little more insulated when it comes to the housing market, but it catches up,” Hoang said. “The slowdown will continue into the next year or whenever interest rates settle down and become more consistent.”

At the end of this year’s second quarter, the credit union posted 7,313 first lien mortgages for a total of $521 million. That was up from 5,908 first lien mortgages for a total of $366 million at the end of last year’s second quarter, according to NCUA Call Reports.

The credit union’s junior lien mortgages, however, declined from 4,083 for a total of $100 million in the second quarter of 2021 to 3,900 for a total of $106 million by the end of 2022’s second quarter, NCUA Call Reports showed.

In September, the $10.6 billion GreenState Credit Union in North Liberty, Iowa, laid off 42 employees because of “market corrections and rising interest rates.” Most of the labor cuts occurred in GreenState’s mortgage lending or commercial banking operations.

On Wednesday, the Mortgage Bankers Association reported that mortgage applications decreased by 2% from a week earlier, according to the organization’s mortgage applications survey for the week ending Oct. 7.

“Mortgage rates moved higher once again during the first week of the fourth quarter of 2022, with the 30-year conforming rate reaching 6.81%, the highest level since 2006,” Mike Fratantoni, the MBA’s SVP and chief economist, said in a prepared statement. “Mortgage rates increased across all product types in MBA’s survey, with the largest, a 20-basis-point increase, for 5-year ARM loans. The ARM share of applications remained quite high at 11.7% – just below last week’s level.”

He also noted that application volumes for both refinancing and home purchases declined and continue to fall further behind last year’s record levels.

“The news that job growth and wage growth continued in September is positive for the housing market, as higher incomes support housing demand,” Fratantoni said. “However, it also pushed off the possibility of any near-term pivot from the Federal Reserve on its plans for additional rate hikes.”