A digital lending platform is laying off 200 employees as a historic surge in mortgage rates tamps down applications.
Blend Labs is letting go of roughly 10 percent of its staff to shed $34.5 million in annual payroll, according to a regulatory filing reported by Inman. Company leadership previously forecast cost-cutting measures as interest rates climbed and the industry braced for a dive in mortgage applications.
Co-founder and CEO Nima Ghamsari said the laid-off Blend Labs employees are eligible for at least 18 weeks of pay and continued health insurance among other benefits, which will reportedly cost the company around $6.7 million in severance and stock-based compensation.
Rising rates means less refinancing and fewer employees needed to process applications. Fannie Mae analysts said this week that they expect lenders to refinance $889 billion in mortgages this year but only $558 billion next year, an 80 percent drop from the $2.8 trillion in 2020.
Home sales are also slipping because of a drop in listings, resulting in fewer mortgages. A rise in the percentage of cash buyers has also been a headwind for the mortgage industry.
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Layoffs have swept the industry in recent months, most visibly at Better.com, where waves of badly handled cuts generated unwanted publicity for the firm.
The online mortgage startup laid off 3,000 workers, or more than one third of its headcount, in March. Some of the New York-based company’s affected employees found out about the layoffs when severance payments were released prior to an official announcement.
Movement Mortgage in April laid off around 170 employees, primarily affecting employees in the processing, underwriting and closing departments in the South Carolina-based company. Interactive Mortgage and Freedom Mortgage had previously reduced headcount.
[Inman] — Ellen Cranley