After a wave of job cuts on the leading edge of the mortgage collapse, it seems that banks, after reporting huge volume declines, are cutting further. Bank of America announced a new round of cuts, adding 4,000 to the 9,000 that were let go in Q3. Wells Fargo just fired 925 workers in addition to the 5,300 downsized in Q3. So far, these are not huge numbers in terms of either bank’s overall employee base, but it points to the banks’ views on expected mortgage volume since it is a large percentage of workers in those departments.

Again, Wall Street’s application pipeline was off 60% from the end of June to the end of September.

That means a primary source (outside of autos and student loans) of monetary “stimulus” is ending. Whatever money households have been able to “cash in” in the past few years of the refi boom looks to be ending, making consumer spending that much more precarious. While we keep hearing the government shutdown was driving consumer sentiment recently, perhaps at least part of that, particularly after recent numbers, is the mortgage inflection.

The timing is about right, since the application level began dropping a few months ago.  Given the time it takes from application to funding, the funding volume may have really started to drop starting in September and into October.  Thus the layoffs; perhaps consumer confidence as well.

ABOOK Oct 2013 Gallup Confidence


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