Mortgage Lenders Lay Off Workers

[Oct 29, 2007.]

The mortgage industry has been hit hard by layoffs recently - the result of the nation's massive housing crisis.

The consulting firm known as Challenger, Gray & Christmas Inc. reports that more than one-third of the 71,739 announced layoffs in September came from the mortgage sector. Overall this year, one in six layoffs can be attributed to the housing crunch.

However, it should be noted that job cuts actually declined in September, compared to August's totals. In fact, layoffs in August numbered 79,459 - a 6-month high. Still, layoffs were even higher in September of 2006, when they numbered more than 100,000.

So far in 2007, companies have announced 587,594 layoffs. That's down 8.1% from the same period in 2006. More than 16% of announced layoffs, or 97,509, were related to the housing industry, including job cuts in real estate, construction, and financial sectors. Interestingly enough, such sectors accounted for only 2% of the job cut totals for the same period in 2006.

The Chief Executive Officer of Challenger, Gray & Christmas, John A. Challenger, was quoted as saying, "It appears that the automotive sector has stabilized for the time being, particularly since General Motors and the United Auto Workers reached a labor agreement. Meanwhile, financial firms cannot cut their payrolls fast enough, especially in the mortgage lending sector."

Economists have feared that the downturn in the housing market would lead to a nationwide recession - but, so far, the effects of the housing crisis have been limited to the industries directly related to home sales. Analysts do not expect the housing market to recover until the middle of 2008, meaning more tough times ahead for lenders, realtors, and construction workers. The Federal Reserve's decision to reduce a key interest rate might have helped some, but investors are hoping the Fed will cut rates yet again before the end of the month.

Julie Ann Amos
October 29th 2007

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