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Falling mortgage market triggers more layoffs at credit unions

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The $1.5 billion Collins Community Credit Union in Cedar Rapids, Iowa, laid off 38 employees Oct. 6 due to declining consumer demand for mortgages and refinancing.

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

Most of the layoffs were in the mortgage division of the credit union.

“We’ve taken a very deliberate approach to providing resources to those affected with a separation program 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 appeals report.

“Iowa tends to be a bit more isolated when it comes to the housing market, but it’s catching up,” Hoang said. “The slowdown will continue into next year or when interest rates stabilize and become more consistent.”

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

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

In September, the $10.6 billion GreenState Credit Union in North Liberty, Iowa, laid off 42 employees due to “market corrections and rising interest rates.” Most of the workforce reductions have been in GreenState’s mortgage or commercial banking operations.

On Wednesday, the Mortgage Bankers Association reported that mortgage applications were down 2% from the previous week, according to the organization’s survey of mortgage applications for the week ending Oct. 7.

“Mortgage rates rose 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,” said Mike Fratantoni, senior vice president and chief economist of the MBA, in a press release. Affirmation prepared. “Mortgage rates rose for all product types in the MBA survey, the largest, a 20 basis point increase, for 5-year ARM loans. The share of ARM applications remained quite high at 11.7%, just below last week’s level. »

He also noted that volumes of refinance and home purchase applications have declined and continue to fall even further than last year’s record highs.

“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, he also pushed back on the possibility of a near-term pivot from the Federal Reserve on his plans for additional rate hikes.”