Mortgage originator loanDepot announced on Tuesday plans to cut thousands of jobs and “significantly” reduce costs as rising interest rates reduce demand for mortgages. Frenzy.
Submission to regulatory agencies release California-based loanDepot will cut about 2,800 jobs this year and add another 2,000 by the end of the year as part of a plan to “aggressively” cut costs by about $ 400 million on an annual basis. He said he plans to reduce it. The company currently employs about 8,500 people.
“After two years of record volume, the market shrank sharply and sharply in 2022,” CEO Frank Martell said in a statement about the plan.
Chief Financial Officer Patrick Flanagan expects the company to continue to have “harsh market conditions” until next year, with mortgage composition halving in 2021 compared to last year and in the coming months. Is predicted to “accelerate”.
Shares in loanDepot, the country’s third-largest mortgage lender, fell nearly 1% early on Tuesday, down nearly 88% this year, compared to a 20% drop in the S & P 500. ..
The company’s struggle arises when housing demand begins to be hit by the Federal Reserve’s interest rate hikes. It is designed to cool decades of high inflation while pushing up debt prices. Interest rates on 30-year fixed mortgages have risen from 3.29% at the beginning of the year to 5.77%, adding hundreds of dollars to the cost of new monthly mortgages.
“Interest rates are significantly higher than they were a year ago, so home purchases and refinancing applications continue to be curtailed. Purchasing activities continue to be affordable,” said Joel Kang of the Mortgage Bankers Association. The challenges and low inventory have reduced the incentive to apply for refinancing. “
Demand for home purchases surged during the pandemic as interest rates collapsed and an influx of Americans began to work from home. However, the Fed’s rate hikes quickly spurred a reversal. Mortgage composition surged from $ 2.3 trillion in 2019 to over $ 4 trillion in 2020 and 2021, but demand has since plummeted. Minimum Level of 20 years or more.