With the Fed increasing basis rate by .75 yesterday to 3.25%, mortgage lending is going to continue to decline.
The 30-year-mortgage rate just hit 6.25%, up nearly a quarter-point from last week, per the Mortgage Bankers Association’s report out yesterday morning……
Why it matters: It’s lean times in the real estate business. The slowdown is a warning for the economy more broadly, and a rare labor market weak spot at a time of strong overall employment.
With interest rates hitting 14-year-highs, and lending activity way down from the peaks of the past two years, layoffs and shutdowns are happening with alarming frequency.
“The housing market tends to lead the broader economy both into and out of recessions,” Mike Fratantoni, chief economist at the Mortgage Bankers Association, tells Axios.
State of play: On Tuesday, real estate brokerage Compass announced the second round of layoffs. Just the day before, Opendoor — which is in the business of buying and flipping houses — announced it lost money on 42% of its transactions in August.
Steele’s former employer Better.com has done four rounds of headcount cuts, including the famously botched mass layoff via Zoom in December 2021, Tech Crunch reported.Real estate company Redfin laid off 8% of its staff in August.
Rocket, one of the largest non-bank mortgage lenders, has done two rounds of cuts. Briefly a meme stock in 2021 when it traded at over $25, Rocket is now at less than $8.