The mortgage industry has been too slow in downsizing, an analyst said.
"There are too many employees in this industry," said Ken Posner of Morgan Stanley Dean Witter. "Originations are off 30%, but I guarantee you that employment is not off 30%."
Originations this year will probably fall below current predictions, Mr. Posner said in a research memorandum that cited industry forecasts and rising interest rates. This would bring volume to the lowest level since 1997.
Brian Carey, an economist for the Mortgage Bankers Association, said mortgage employment may not have fallen much this year because the market has been much stronger than most people in the industry had expected.
Nonetheless the MBA recently reassessed its forecast for 2000. The originations projection was trimmed back 1.3%, to $972 billion, and several analysts said they expect the trade group to lower that estimate further.
Originations totaled $1.29 trillion last year, after an all-time high of $1.51 trillion in 1998. The 1997 figure was just $834 billion.
Frank Raiter, managing director of Standard & Poor's Ratings Services, said that though industry estimates put originations at $960 billion to $980 billion this year, S&P believes they may come in closer to $940 billion.
But if interest rates do not rise, $960 billion or more would be a "reasonable range of expectation," Mr. Raiter said.
The latest MBA survey found mortgage applications in the week that ended Feb. 18 down 1.3% from the preceding week and 20.5% from a year earlier.
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