The mortgage layoffs are here.

Firms of all sizes in the mortgage space have announced major layoffs since the Fed increased interest rates to fight inflation. Analysts predict a 35% to 50% decrease in mortgage origination in 2022.

Why should we care?
The downturn won’t affect all mortgage lenders equally. Banks like Wells Fargo and JPMorgan announced major cuts to their ranks, but non-bank lenders have seen even more drastic layoffs, because their businesses are less diversified, more vulnerable to declining mortgage demand, and more likely to work with first-time buyers, who have more elastic demand for mortgages than experienced customers. Better.com, for example, has let go of almost 4,000 employees since December 2021; trickling demand has also bled into adjacent industries, like real estate, forcing Redfin and Compass to conduct drastic staffing cuts as well. “We could be facing years, not months, of fewer home sales,” said Redfin CEO Glenn Kelman. “We don’t have enough work for our agents and support staff.” With challengers facing a relatively greater struggle than established lenders like Wells Fargo or JPMorgan, banks may be tempted to acquire mortgage startups and proptechs during a downturn. Rising interest rates may inadvertently consolidate power in bigger players’ hands.