A digital lending platform is laying off 200 staff as a historic spike in mortgage rates slows applications.
Blend Labs is laying off about 10% of its staff to lose $34.5 million in annual payroll, according to a regulatory filing reported by Inman. Company management previously planned cost-cutting measures as interest rates rose and the industry braced for a drop in mortgage applications.
Co-founder and CEO Nima Ghamsari said laid-off Blend Labs employees are entitled to at least 18 weeks of pay and continued health insurance, among other benefits, which would cost the company about $6.7 million in severance pay and shares.
Rising rates mean less refinancing and fewer employees needed to process applications. Fannie Mae analysts said this week they expect lenders to refinance $889 billion in mortgages this year, but only $558 billion next year, down 80% from to $2.8 trillion in 2020.
Home sales are also falling due to a drop in listings, leading to lower mortgages. An increase in the percentage of cash buyers was also a headwind for the mortgage industry.
Layoffs have swept the industry in recent months, most visibly at Better.com, where waves of mishandled cuts have generated unwanted publicity for the company.
The online mortgage startup laid off 3,000 workers, more than a third of its workforce, in March. Some of the New York-based company’s affected employees discovered the layoffs when severance payments were made ahead of an official announcement.
In April, Movement Mortgage laid off about 170 employees, primarily affecting employees in the South Carolina-based company’s processing, underwriting and closing departments. Interactive Mortgage and Freedom Mortgage had previously downsized.