In the wake of the last housing crash, online lenders came to dominate the mortgage market. Those firms are now struggling to survive the latest downturn, with soaring interest rates hurting home sales and refinancing demand, Bloomberg News reported. Better, the beleaguered mortgage provider that’s cut roughly two-thirds of its workforce, is poised to eliminate even more jobs. LendingTree Inc., Pennymac and Home Point Financial Corp. have also reduced their staffs. Such cost-cutting could be helpful in the short term, but may not be enough to allow the nonbank lenders to last long enough to see a mortgage-market recovery. Borrowing costs for 30-year, fixed-rate mortgages are hovering around their highest level in two decades, with the average interest rate now above 7%. That’s pushed some homebuyers out of the market and forced others to cancel purchases. Mortgage costs have been boosted by the Federal Reserve’s efforts to tamp down inflation, including a 75-basis-point hike to its benchmark interest rate in early November.
