Quicken Loans Layoffs 2023: What’s Behind the Job Cuts?

Quicken Loans, now officially known as Rocket Mortgage after a rebranding in 2016, has been making headlines for employee layoffs in 2023 amid an industry-wide downturn in the mortgage market The Detroit-based lender, part of Rocket Companies, has cut thousands of jobs as loan demand dropped sharply when interest rates surged.

For years, Quicken Loans was the largest mortgage lender in America by loan volume. But its dominance has slipped recently, with rival United Wholesale Mortgage taking the top spot. This reversal of fortune plus the broader slump has forced Rocket Mortgage and its Rocket Companies parent to enact steep job reductions.

Here is a closer look at the Quicken Loans layoffs in 2023 why they’re happening, and what it means for the company’s future.

Overview of 2023 Job Cuts

After nearly a decade of aggressive hiring and expansion, Quicken Loans finds itself overstaffed for the current market conditions This has resulted in two major rounds of layoffs so far in 2023

• January 2023 – Rocket Mortgage eliminated around 50 positions, mostly affecting software engineering roles. Rocket Central also cut around 20 marketing jobs earlier in the month.

• March 2023 – SEC filings revealed Rocket Companies reduced staff from 26,000 in late 2021 to 18,500 by end of 2022. This means around 7,500 jobs were cut, though exact timing is unclear.

Additional smaller cuts likely occurred but were not publicly announced or reported. The total job losses could reach 8,000-10,000 based on reported figures when including attrition.

What Prompted the Layoffs?

The layoffs can be attributed to the dramatic slowdown in the mortgage market. Some key factors driving the need for job cuts include:

• Less Refinancing – Rate hikes killed refis, which were a huge portion of Quicken’s business. Their revenue from this business fell by $3.1 billion year-over-year.

• Declining Purchase Volume – Higher rates and inflation also slowed purchase originations, which were down 62% for Rocket in 2022.

• Falling Income – With lower origination volume, Rocket’s net income dropped a staggering 89% to just $700 million in 2022.

• Excess Capacity – Rocket rapidly expanded during the refi boom, leaving them overstaffed for today’s market. Management suggested current staffing levels align with capacity needs.

• Loss of Market Share – Losing the #1 lender title to rival UWM added pressure to cut expenses to stay competitive.

• Cyclical Nature – Mortgage lenders must be ready to scale up or down staff quickly as rates cycle up and down.

Essentially, with revenue down and previous staffing levels unsustainable, sizable job cuts became a necessity.

Departments and Locations Impacted

Based on employee accounts, key groups affected by the layoffs include:

• Software engineering for Rocket Mortgage and Rocket Central

• Marketing department at Rocket Central

• Mortgage bankers, loan officers, and loan processors

• Support staff in departments like underwriting, closing, compliance etc.

• Corporate headquarters in downtown Detroit as well as operational hubs in Phoenix, Cleveland, and other large locations

Quicken Loans has a vast network of offices, so most sites likely saw at least some job losses. But the main mortgage lending operations centered in Detroit were probably hit hardest.

How Layoffs Were Handled

By most accounts, the job cuts were handled professionally and compassionately. Quicken Loans tried to soften the blow through generous severance packages and career transition help:

• Employees let go were given several months of salary as severance

• Benefits like health insurance were extended for terminated workers

• Career coaching, resume reviews, and interview prep offered for free

• Virtual hiring events held to connect former staff with new job openings

• Employees received deep discounts on Rocket services like mortgage origination and car buying

These measures helped departing team members land on their feet more easily despite the difficult situation.

Impact on Company Culture

Quicken Loans has a reputation for having one of the best workplace cultures, often topping “Best Places to Work” lists. However, the large job cuts likely took a toll on morale, especially for remaining employees taking on more work.

Some ways the layoffs may have impacted company culture:

• Leadership had to work to maintain trust after breaking “no layoffs” precedent

• Anxiety about future job security and more potential cuts

• Loss of institutional knowledge from long-tenured departing staff

• Remaining teams strained due to vacant positions

• Rise in stress and lower engagement/motivation

• Disconnect between inclusive culture and reality of layoffs

Rebuilding morale and restoring the cultural vibrancy Quicken Loans is known for will be critical after the turbulence of the downsizing.

Will More Layoffs Occur in 2023?

It’s unlikely Rocket Mortgage will need job cuts of the same magnitude again in 2023. But smaller targeted layoffs could continue in specific areas where workforce alignment needs adjusting.

Some factors that will influence additional layoff decisions:

• If mortgage volumes decline further as predictions expect

• Any more market share ceded to competitors like UWM

• Ongoing technology and process optimization lowering labor needs

• Employee attrition reducing need for involuntary terminations

• Evolution of Rocket Companies’ business mix shifting talent needs

• Macroeconomic conditions like recession and unemployment

Regular workforce evaluations will enable agile right-sizing if market forces require. But massive company-wide cuts probably won’t repeat in 2023.

Impact on Growth Plans and Market Position

Despite the layoffs, Rocket Companies maintains that their long-term outlook remains strong. The job cuts aimed to position Rocket Mortgage to weather the downturn and emerge in a lean state ready for the next upcycle.

Some ways the layoffs may support future growth and market position:

• Sharpened focus on most profitable business lines

• Resources shifted from shrinking sectors like refi to purchase mortgages

• Technology investments to boost productivity and efficiency

• Reinforcing status as industry’s top tech innovator

• Rightsized capacity to capitalize when volumes improve

• Stronger cost discipline and financial foundation

• Resources freed up to keep gaining share in other Rocket ventures

Rocket Companies also contends its platform model and client retention efforts will lessen volatility compared to rivals.

Is the Mortgage Industry in Trouble?

While the sweeping layoffs at prominent lenders like Quicken Loans are concerning, this performance fluctuation comes with the cyclical territory of the mortgage sector.

A few reasons the mortgage business as a whole remains on solid ground overall:

• Fundamentals underlying housing market are still healthy

• Interest rates could moderate, boosting affordability and demand

• Massive wave of Millennial first-time buyers still coming

• Fast-rising rents push more renters to want to buy

• Remote work trends may spread housing demand to new areas

• Favorable demographic trends with young families forming

So the layoffs, while painful presently, may just be a normal pull-back preparing lenders for the next upswing on the horizon.

The mortgage arena has weathered far worse crashes before. This staff reduction period, though difficult, will likely make lenders stronger in the long run. Quicken Loans included.

Will Quicken Loans Regain the #1 Spot?

Despite ceding its mortgage lending crown to rival UWM, Quicken Loans appears confident in its future outlook. Its technology focus could give Quicken Loans the edge to reclaim the top lender spot when the market rebounds.

Some advantages that may help Quicken Loans move back into first place:

• Huge investment in digital lending experience and efficiency

• Cutting-edge use of data analytics and artificial intelligence

• Massive marketing budget to rebuild brand awareness

• Renowned client service levels and operational excellence

• Continued high loan officer productivity

• Potential disruption from emerging industry segments like iBuyers

• Customer loyalty and retention from past borrowers

• Strong reputation as industry innovator and tech pacesetter

With its vast resources and staying power, few would bet against Quicken Loans eventually working its way back up the lender rankings when conditions improve.